The Housing Market Has Slowed To A Crawl
The Journal News reports from New York. “You needn’t tell Paul Meda that the housing market in Rockland County has slowed to nearly a crawl in recent years. That’s because Meda and his wife, Maria, have been trying to sell their four-bedroom, 2 1/2 bath bilevel for about two years. ‘We’ve actually had offers on it,’ said Paul Meda, a retired police officer who now works in South Plainfield, N.J., managing commercial construction projects.”
“But the offers, often made by novice home buyers who think it’s still possible to get a loan for 100 percent of the purchase price, have fallen through, he said. Having initially listed their 1,900-square-foot Inland Road home for $469,900, the couple have since lowered the price to $411,900.”
“The inability to sell has put the Medas in a pinch, since they can’t afford to buy another house, one that’s closer to his work, until they sell this one. ‘If we get a signed deal, we’ll start looking right away,’ he said.”
“Data released yesterday showed the median price for a single-family home fell 10.2 percent to $453,500 in the second quarter - typically the busiest of the year, down from $505,000 a year ago, according to data compiled by the Greater Hudson Valley MLS.”
“During the three months ending June 30, transactions fell nearly 29 percent to 280, from 393 in the quarter last year. For the first time in recent history, the inventory of unsold homes in Rockland surpassed one year, according to an analysis by The Journal News.”
“Given the current number of unsold homes and rate of sales, it would take 16.2 months to clear the county’s inventory.”
“In neighboring Orange County, the median price for a single-family home fell 6.2 percent to $300,000 from $319,900 last year; the number of units sold in the quarter fell 28 percent. The data revealed it would take nearly 19 months to sell all of the homes that are on the market in Orange County, given current inventory levels and pace of sales.”
“Though median prices fell just 1.9 percent in Rockland and 1.4 percent in Orange, the number of condo units sold in Rockland fell 42 percent. ‘At this point in time, we’re still not seeing a recovery in the market,’ said Ann Garti, CEO of the Greater Hudson Valley MLS.”
“Marsha Rand, founder and chairwoman of Prudential Rand Realty, which has 19 offices in Rockland, Orange and Westchester, said until home prices come down further in Rockland, sales won’t improve. Rockland may have experienced a greater inflationary push on home prices than other nearby counties, she said.”
“‘Therefore, we may have to correct a little bit more,’ she said.”
The Poughkeepsie Journal. “June home sales were down for both Dutchess and Ulster counties compared to a year ago, new reports show. In a year-to-year comparison, June sales fell 26 percent in Dutchess and 44 percent in Ulster. Dutchess prices were down, too, versus June 2007.”
“Average home selling prices in Dutchess dropped by 13 percent for single-family free-standing homes, from $409,828 to $357,303. Condominium, co-op and townhouse average prices decreased 7 percent, from $235,240 to $219,916, according to the Mid-Hudson MLS.”
“‘I do see a cause for optimism through opportunity because … the price of the sold home appears to be moving more in concert with the financial position of our buyers,’ said Sandy Tambone, executive officer with the Poughkeepsie-based listing service.”
“Anne Rajs, a Realtor in New Paltz, acknowledged the economy, fuel prices and the uncertainty of an election year may be factoring into home purchasing decisions.”
“The mid-range homes between $350,000 and $700,000 aren’t attracting people who normally want to trade up, she said. ‘Those people are being much more careful about what they do.’”
CNN Money on New York. “Only weeks after moving into their first home in 2006, Margarita Rios celebrated Christmas with her two daughters and their families. They finally had the room to do it right, with decorations outside the Valley Stream, N.Y., house and a nice tree surrounded by presents inside.”
“Christmas 2008, however, is shaping up to be a nightmare. No decorations. No tree. No house.”
“In February, faced with an unexpected jump in her monthly mortgage bill, Rios stopped making payments and abandoned the home, shattering her life and scattering her family.”
“She and her new husband moved into a tiny rental apartment in Brooklyn and are trying to negotiate with the bank to sell the house without foreclosing. One daughter relocated to Queens, while the other is heading back to Mexico with her three children to escape New York’s high cost of living.”
“Rios knew when she bought the house she’d have to skimp to make the mortgage payments. But she felt it was worth it.”
“‘It was a sacrifice but at least we’d have a home,’ said Rios, who spoke through a translator.”
“But counselors at the Nassau County Homeownership Center, to whom she turned for help in January, said they’ve seen cases like Rios’ too many times in recent years. ‘That type of loan should never have been made,’ said Haydee Rosario, a homeownership counselor at the center.”
“Rios was the owner of a $489,000 four-bedroom home. With her daughters each paying $1,500, she could cover the remaining $1,100. The real estate agent said she could refinance within two years and lower her payments.”
“Instead, the opposite happened. This past January, the monthly payments jumped to nearly $4,400, overwhelming the family. They were already struggling to make the payments and even a $300 increase was too much to bear.”
“Though it was difficult for her to accept, Rios decided to let the home go. ‘We just couldn’t do it,’ said Rios. ‘It was taking everything we had. It was just too much.’”
Bloomberg on New York. “Brooklyn apartment and townhouse sales fell 44 percent in the second quarter from a year earlier and prices dropped 1.9 percent. The median sales price declined to $525,000 from $535,000 in New York City’s most populous borough. The number of sales fell to 2,031 from 3,601, property appraiser Miller Samuel Inc. said in a report.”
“Brooklyn is experiencing a wave of new condo development as Manhattan prices have more than tripled over the last 10 years. The median price in Brooklyn is about half the $1.03 million median in Manhattan. New developments comprised more than half of all condominium sales in the borough.”
“Six out of every 10 banks raised standards for home loans to their most creditworthy borrowers in the first quarter, according to a Federal Reserve survey of senior loan officers. The property market in New York City is also slowing as financial firms cut almost 90,000 jobs after taking more than $400 billion in mortgage-related losses and writedowns.”
The Westport Minuteman from Connecticut. “John Gerlach, associate professor of finance at Sacred Heart University, a co-owner of a wine shoppe in Fairfield, recently advertised for a part-time sales job that drew 45 resumes - two with Masters Degrees and 17 college graduates.”
“‘There will probably be the loss of more jobs around here,’ Gerlach said. ‘As the part owner of a liquor store, we received forty-five resumes. It shows what the employment market is like in Connecticut now. Many of our graduates (Sacred Heart University) are not finding jobs. Last year, many had two and three offers.’”
“Gina Picon, owner of Chic Mommy in Westport, is weathering a significant reduction in customer spending. A maternity boutique, Chic Mommy had developed a growing customer base over six years, but Picon fears the slumping economy is tightening her customer’s purse strings.”
“‘We’re in a recession. We see it. People are not shopping like before,’ Picon said. ‘Many of my customer’s husbands work in the stock market and financial institutions. The wives are watching what they spend.’”
The Patriot News from Pennsylvania. “The midstate housing market still favors buyers. The nearly 4,500 homes listed for sale at the end of the second quarter are the most since before 2000, said John Andrews, a real estate agent in Lemoyne. Houses are taking longer to sell, according to Central Penn Multi-List. That means buyers can be more aggressive with haggling, Andrews said.”
“That wasn’t the case during the housing boom, when fewer homes were on the market. They sold fast — often within weeks — and prices were rising so fast that buyers felt they had to pay whatever a seller demanded.”
“‘Buyers are more particular,’ said Michael B. Yingling, a broker in West Hanover Twp. ‘A couple [of] years ago, if the house needed to be painted, [the buyer] would take it because it may not be on the market long. Now they want it painted and in move-in condition.’”
“Building permits approved in the Harrisburg area have returned to the 2002 level of 1,200 a year, from an annual pace of 1,600 in 2004 and 2005. About 500 fewer homes sold in the midstate in the second quarter of 2008 than in 2007.”
“‘The market is going to get softer. By the end of the year, you will see prices start to dip. This inventory can’t continue to grow [and not] result in lower prices,’ Andrews said.”
“Ryan T. Riley, 23, said he was able to get a good deal after he qualified for a 30-year fixed-rate at 5.95 percent. He bought a rehabilitated house in midtown Harrisburg for $140,000, despite having never owned a home and having just one year of employment.”
“The seller, WCI Partners, will pay Riley’s closing costs. His mortgage company will cover the down payment — an incentive offered to first-time homebuyers. His only concern is that if he had to sell in the next year or so, he might not get $140,000.”
“But he said he is confident that after two or three years, midtown home values will be much higher. ‘I found this to be an advantageous time to buy,’ Riley said. ‘There are mortgage brokers who need clients and need jobs. I think they find creative ways to make it work.’”
“But the offers, often made by novice home buyers who think it’s still possible to get a loan for 100 percent of the purchase price, have fallen through, he said.
I’ve actually suspect this is happening a lot in my area as well. Several homes that were “sold” have gone into escrow, only to re-emerge on the MLS a few weeks later.
I regularly drive by one home that has had a PENDING rider on the sale sign, for months. I can’t figure out if they still are scrambling trying to get financing, or if they just forgot to take down the sign.
Same here out in the East Bay, California. There was this initial “bounce” in say- May and June. Ever since, seems like nothing is selling. There has been three houses that have “sold” only to come back up again. Many don’t ever go pending, but after a few months, the signs go down, then go back up. One house was pending in April. It was still pending last time I saw it month ago.
It’ll be interesting to see what the numbers will be. I suspect sales might be up, but only in the crappiest, cheapest neighborhoods.
The question of price is totally irrelevant as the recent boom was a pyramid scheme. What I’d like to ask is that if Ms.Meda had to buy his house, could he? Would he qualify without 100% loan?
say what,
Correct. Remember when the conversation at parties was “Oh, if I had to buy my home today ( pause for effect ) I couldn’t afford it!” Followed by raucous self-congratulatory laughter?
Talk about group-think.
Heard this very comment from an older gentleman last year. He’d lived in his neighborhood for a long time, and he was anything but pleased about the uber-rises in house prices.
If you think this is bad, wait for Fannie and Freddie to go into bankruptcy. Depression is coming.
The scary thing is that it seems that the Politicians have no clue about what to do about Freddie and Fannie. They realize that there isn’t enough money in the pot to bailout either given the enormous scale of their financial failures. If Fannie and Freddie go under, then we’re talking about an enormous change in purchasing power. As in you and I might be required to pay for homes with cash the old-fashioned way. That’s fine with me, but 99% of the US has no way of doing this.
man, i would love that day to come…
In a way, so would I, but rest assured that if the only people who are able to buy a house are those who can actually afford it, the crooks will find some way to make sure NOBODY can afford it. A merit-based system is what they want to avoid at all costs. Spending less than you make is a sin in their eyes.
Given that I still have a mortgage, I’m not sure I would relish that day. It might be accompanied by significant deflation, and it would be nice to sell our place 30 years from now when splitting firewood finally becomes difficult.
I agree with Yogurt, below, though - people with money want to make more.
“A merit-based system is what they want to avoid at all costs”
Pondering the Mess, so well said. When you look at the different credit profiles over the last several years and the fact that the difference in mortgage rates for someone with a 500 FICO and an 800 FICO was about… 1/2 a point? Makes a fella’ kind of ill doesn’t it?
And FICO is important because of why..?
How long does it take for the avg. borrower to figure THAT out!? Where’s the incentive to pay on time and use credit judiciously?
As in you and I might be required to pay for homes with cash the old-fashioned way
Nonsense. As long as there is somebody with money, there will be money available for mortgage loans. Anyone or any corporation can loan money for mortgages.
It’s just a question of % of LTV and interest rate. The market will work it out, just like it works out the price of everything else.
The problem with a bail out is that this does nothing to solve the real problem. The US government would have to guarantee all future mortgages like they do student loans. Not only do you have to do the bailout but you also have to inject significant funds to restart the ponzi scheme.
And like student loans the only way to make it work is to eliminate the ability to discharge a mortgage debt. You can do it if you have to pay it off. But making mortgage debt permanent is impossible. And if it would try it would plunge housing value down to the level of car loans. Most people can barely handle permanent student loan debt. Permanent mortgage debt on top is simply to much.
No way out.
This Dodd character is a real rocket-scientist.
–
Reuters reported that Sen. Christopher Dodd, chairman of the Senate Banking Committee, said Fannie and Freddie were fundamentally sound.
–
The Times says this as if it were a bad thing. Imagine all the people, making loans that had be repaid instead of sold off … the horror!
Were Fannie and Freddie unable to borrow or find it too costly to borrow, they would not be able to buy mortgages from lenders. This would make it far more difficult, and perhaps impossible, for people to obtain home loans, which could cause the housing market to grind to a halt.
RE: Were Fannie and Freddie unable to borrow or find it too costly to borrow, they would not be able to buy mortgages from lenders
The saying I always took heed of said, “a house is only worth what somebody is willing to lend against it”.
I wonder what values will revert to, with cash only financing?
Now that’ll sure be the death knell for boomer retirements.
> I wonder what values will revert to, with cash only financing?
It will never come to this. Even if every bank stopped making residential mortgages available, people would purchase homes on a Contract for Deed, i.e. seller financing. This is still a common way of buying raw land in rural areas between private parties.
No realtors. No lenders. No commissions. No fees. Just sign a piece of paper and file it at the court house for $35.
-Lucas
Woo hooo! I just got approved for a limited documentation 5/1 ARM with 10% down.
The papers recycle the same stories over and over, they just find a different ‘victim’ of the housing market. It should be obvious to the note taker at the paper, that this fellow does NOT want to sell his house. If he did he would get serious and lower the price. Of course what’s not written is they are waiting for the big mythical rebound.
“But the offers, often made by novice home buyers who think it’s still possible to get a loan for 100 percent of the purchase price, have fallen through, he said. Having initially listed their 1,900-square-foot Inland Road home for $469,900, the couple have since lowered the price to $411,900.”
“The inability to sell has put the Medas in a pinch, since they can’t afford to buy another house, one that’s closer to his work, until they sell this one. ‘If we get a signed deal, we’ll start looking right away,’ he said.”
I was thinking the same thing. This is getting to be an old story. Sellers who say they REALLY want to sell their house, but they’re not willing to price their house realistically. It may take a while before people realize how unrealistic the bubble prices were. And I can wait.
I have a question though about this statement: “Given the current number of unsold homes and rate of sales, it would take 16.2 months to clear the county’s inventory.”
Does that mean it would take 16.2 months to clear the existing inventory, or does this figure account for a certain amount of houses coming on the market each month?
I’m beginning to wonder if anyone will be able to sell a house at ANY price. There just aren’t that many people that are sitting on a pile of disposable cash, vs. the number of people that will have to sell their houses (for various reasons).
Don’t gloat too much, holders of cash……..much like Willie Sutton, the various levels of government will be coming up with various new taxes and user’s fees, because “that’s where the money is”
Oh sure they will. If a house can be rented for more than taxes, maintenance, etc. it has asset value and someone will be willing to buy it for the yield.
it’s just a matter of price.
There will be lots of buyers playing at 80-100x monthly rent to buy. Assuming rents are stable and expectations are they will remain so (or increase).
I don’t buy the “careful what you wish for” nonsense being bandied about (mostly by REIC types trying to scare us into bailing them out). You want to sell your house? Simple: LOWER the F***ing PRICE. End of the world, it’s not.
Once the price hits a level truly sustainable by local incomes and rents, there will be plenty of lenders and buyers. The total lack of faith in free markets professed by supposed believers of free market capitalism is breathtaking.
RE: I’m beginning to wonder if anyone will be able to sell a house at ANY price.
With the coming Depression, employment stability will
become too dicey to commit to a commodity with a fixed location.
People better enjoy where they’ve parked their collective azzes.
What these sellers really want is to scalp someone. They don’t want fair market value, they want some overbloated fantasy price so they can retire, or buy their “dream home”. We’ll know when the market has bottomed out, because these greedy rejects will no longer be clogging up the mls.
It’s kind of funny to watch. People who won’t accept the market as it is either have to cut their losses, or sit on the sidelines with the rest of us! But I guess there are still half a dozen yo-yos out there dreaming or fearing that prices will head back up soon, so they must be selling this crap to each other.
O/T Ben, this story ran in yesterdays Deseret News.
http://deseretnews.com/article/1,5143,700241966,00.html
The number of Utah homeowners who received a foreclosure filing in June jumped nearly 141 percent, compared with the same month last year, according to a report released Wednesday.
The 140.54 percent increase was almost three times the national increase of 53.28 percent for the same period, the report from RealtyTrac said
and…
The St. George area ranked 27th among metro areas nationally for its rate of foreclosure filings in June, with one foreclosure for every 245 properties — the highest rate among cities in Utah. St. George had a 13 percent hike in foreclosure filings from May to June of 2008 and 174 percent year-over-year increase.
Read the comments section and you will see that many residents of our State are beginning to walk away from the idea that “it’s different here”.
Steady,
There was a similar clip on KSL yesterday, I had forwarded on to Ben, guess he didn’t have room. Anyway, I noticed the same thing in the KSL comments thread, at first it read almost like an HBB comment section. Comments were quite rational, unusually so. Then I went back later in the day, and the RE shills had trashed the first 2 or 3 sub-threads with their discredited spew. Guess some folks are really getting scared.
Bantering Bear,
That goes hand in hand with something you said many months ago about people that list at astronomical prices just so they can fantasize about how great it would be to roll around naked in those big fat stacks of cash. This is essentially “Part II” of that same ugly, greedy mindset.
Shaft somebody as you make your exit and then lowball like hell on the buy end. That or just keep it in suitcases under the bed. And all this just to keep the little Mrs. happy. These are the people I want to see take the Bonus Plan JT Treatment while being impaled on The Shaft O’ Greed.
Typically, inventory refers to how long it would take to sell all homes currently on the market at the current rate of sales. This method contemplates the length of time to sell just that number of homes and does not account for other homes which would come into the market (it’s just one way to try and compare market to market, year over year…).
“Rios was the owner of a $489,000 four-bedroom home. With her daughters each paying $1,500, she could cover the remaining $1,100.
$1500/month to live with mom?
They were paying $4100/month all together. According to the article it was the “unexpected” rise in her mortgage payment to $4,400 that put her over the edge!
Never mind the concept of an “unexpected” rise in your mortgage payment–she was living on the edge from the get-go!
are they even legal citizens? do they even have SS#????
BACK TO MEXICO WITH HER 3 KIDS? do not let the door hit you in the arse on the way out
long island is getting scarier by the day
Lots of foreigners are buying property without social security numbers. Not everyone from Mexico is here illegally. They are our number one source of legal immigrants as well.
I see no difference between making an inappropriate loan to someone from Mexico or Canada. That’s what’s scary…that anyone with a pulse could get a loan.
When I was looking to buy back in 99/00 we were told that we had to get a mtg based on my salary since my wife was only in the process of getting a green card.
In 05 or 06 they started knowingly giving mortgages to illegal aliens. WTF happened in 5 years?
I see no difference between making an inappropriate loan to someone from Mexico or Canada.
I’m not aware of any Canadian propensity to pack a dozen friends or relatives into a SFH, or for their offspring to form gangs. It’s not just a matter of “inappropriate” loans; it’s the effect on formerly decent neighborhoods.
I know of an illegal that got loans for two $400,000.00 homes, didn`t even have a drivers licence, walked away from both. But worse than that, Martin Memorial Hospital [ Martin County Fl. ] took care of an illegal for two years at a cost of 1.5 million [he obviously had no insurance] he was sent back to his country uppon his release, now his family that is still in this country is sueing the hospital for having him deported. So far the hospital has $250,000 in attorneys fees fighting that case.
Wonder why health insurance is so expensive ?
I have no problem with hispanics; great people. I have a huge problem with illegal aliens who are gaming the system, have no intention of assimilating, and who sign up for half a million dollar homes while making minimum wage, only to lose them in foreclosure. They leave a massive trail of financial destruction as they head back to Mexico, conveniently unaccountable for everything they’ve done.
It’s the system that allows illegals to work in the US and borrow money that’s the problem, not the illegals themselves. They are just pawns.
Fight the real enemy.
You’re right, yogurt. They didn’t take it upon themselves to enter this country illegally. There is no such thing as free will, somebody forced them to break the law.
To be serious, they’re not the pawns, the legal citizens of this country are. The illegal workers are the “scabs”. I wonder how the citizens of Mexico would feel if perhaps some Africans broke their borders, and were more than willing to work for half or less of what they (Mexicans) were earning. Something tells me they wouldn’t be happy.
I never said the system wasn’t broken. But these law breakers have a lot of accountability in this hideous mess.
Mexicans come from a culture that is deeply corrupt, dysfunctional, and steeped in criminality. To suggest that they suddenly embrace WASP values when they cross the Rio Grande is a dubious proposition.
RE: Mexicans come from a culture that is deeply corrupt, dysfunctional, and steeped in criminality. To suggest that they suddenly embrace WASP values when they cross the Rio Grande is a dubious proposition.
You’re right on the money, SS.
Gotta say all those decapitated heads appearing on the front lawns of the local police departments are rather reflective of a society in deep doo-doo.
There is a saying in Mexico: El que no tranza, no avanza.
He who doesn’t cheat, doesn’t get ahead.
@ Bantering 11:39
You’ve got that right. Forget about an African invasion of Mexico. Just look at the Mexican response to Guatemalans who try to cross the border into MX. I have read that they are not exactly accommodating to their Hispanic, job-seeking, brothers-in-arms.
BACK TO MEXICO WITH HER 3 KIDS?
I suspect that a lot of illegal FBs will head home rather than face bill collectors. The INS (or whatever its called today) might not be interested in tracking them down, but creditors and skip tracers will make their lives miserable. Once the repo guy comes after their “Troca” (pickup) I suspect that many will take off with their unpaid troca and vanish into rural Mexico (or wherever they came from).
There will probably be a new cottage industry for phony pink slips for the trocas (to get them into Mexico).
$1500/month to live with mom?
Actually, I missed the implication of this!
Nobody would pay $1,500 to live with mom!
This was a scheme by the three of them to get-rich-quick! There’s no other reason an adult, let alone two of them, would pay $1500/month to rent a room. They all thought they’d flip the house in a year and make a pile of money. There’s NO OTHER possible explanation.
The CNN reporter accepted this sob story at face value. Too bad.
I know, I always thought the whole point of living with mom was to mooch.
Immigrants have been known to live 2-3 families to a house in order to buy it (or even rent it). For some of them, they don’t know any other way to live. I once knew a Laotian family and an Indian family who hadn’t been Americanized enough to see anything wrong with this.
This will be the new norm by 2010-12 for more of the Americanized working class as well. If not to pay the mortgage, then it will be to pay the energy bills.
For some of them, they don’t know any other way to live.
When my uncles (and families) arrived in the States, they piled eleven people into a two bedroom apartment.
But as soon as they were established in jobs they moved into their own places.
I was always under the impression that when people double and triple up in a residence, it was for economy’s sake, not to spend money out the wazoo for extra cozy familial bonding.
$1500/month is a lot to pay when you have to share space with mommy ,sister, nieces, nephews, and God knows who else.
My father grew up in a household that included his immigrant grandmother. She had been widowed at a fairly young age and had no job skills. So, she lived at the residence-of-last-resort.
Well maybe Bob Toll was right, he did say kids would have to live with their parents.
Many Asians include three generations in the same house, not always from economic necessity. Cultural norm is for the kids to take care of the parents; grandparents take care of the little ones.
(No, this doesn’t speak to the possibility of fraud.)
But it is useful to remember that some cultures people their homes in ways that would rankle some U.S.-born.
Lack of privacy and all that.
And some of those big families have lots of cash that they work nonstop for.
reuven avram,
“she said through a translator”
We’ll set that aside for a minute as your observation is more on point. Again this plays to this whole sick and twisted notion of using your children as straw buyers, markers and “parking” when you’re just fresh out of Greater Fools.
For most people home purchases are emotional enough. When you start playing on the emotional ties of family..! Just imagine what kind of guilt trip she must have laid on her daughters? “You DO love your mother, DON’T YOU!? Besides it will be good for “everybody”.
Anyone high-tailing it for South of the Border couldn’t have had much in the way of resources to begin with. Was she “escaping” the high cost of living in NY… ( or her mother? )
I wondered where the father(s) of those three children are, and what their role in this little fiasco has been. Wouldn’t surprise me to learn that there were three different fathers who never paid a dime in child or spousal support.
From PoJo news article;
“The mid-range homes between $350,000 and $700,000 aren’t attracting people who normally want to trade up, she said. ‘Those people are being much more careful about what they do.’”
This is exactly what I stated here roughly 3 weeks ago. Anything above the $200-250k rage is *sitting*. And it’s going to sit until the local RE mobsters have a come to Jesus moment with these delusional sellers.
Another note- Inventory continues to build if new 4Sale signs are any indication. The churning continues in Dutchess County, i.e., FSBO/Realtard sign swaps, etc. but price reductions appear to be verboten.
Example? Friend of inlaws sold snug as a bug in a rug SFH in Eastern Dutchess Co in 2005 for $280k. It’s back on the market for 305k through MLS. So someone tell me what kind of idiots are running the local RE crime syndicate?
And here’s an example of a come-to-Jesus moment:
“Marsha Rand, founder and chairwoman of Prudential Rand Realty, which has 19 offices in Rockland, Orange and Westchester, said until home prices come down further in Rockland, sales won’t improve. Rockland may have experienced a greater inflationary push on home prices than other nearby counties, she said.”
“Friend of inlaws sold snug as a bug in a rug SFH in Eastern Dutchess Co in 2005 for $280k. It’s back on the market for 305k through MLS. So someone tell me what kind of idiots are running the local RE crime syndicate?”
This is the very reason that in the “old school” you didn’t buy a house that you did not plan to live in for AT LEAST 5 years. Typical inflation at 2-3% assures that you can cover the closing costs when you re-sell.
Commission: 6% Title costs: 2% Taxes/fees/etc: 2%
280,000 x 1.10 (for 10% added closing costs) = 308,000.
The syndicate is pricing to sell what’s owed plus selling costs, for a break even sale for the owner.
Dio, That was my thought too when I saw the price. See? Housing is a can’t lose infestment.
I don’t know anything about the area, but 350-700 is “mid-range’?? Sheesh.
Blano, consider the source is your average asswipe realtard attempting to reframe the price structure. Trust me, there aren’t a whole lot houses going for 700k around here.
“But the offers, often made by novice home buyers who think it’s still possible to get a loan for 100 percent of the purchase price, have fallen through, he said. Having initially listed their 1,900-square-foot Inland Road home for $469,900, the couple have since lowered the price to $411,900.”
The United States has a negative savings rate. There’s 1 Trillion dollars in credit card debt.
This means that almost nobody has enough for a down payment.
Which means that no matter how much you lower the price, there will be very few potential buyers.
A lot of homes will effectively be worth $0 (especially in areas with huge inventories) because they will take years to sell.
Which is all perfectly fine and dandy for someone like me who plans to buy with cold hard cash. I’m personally glad that the majority of Americans are complete morons with saving money and accumulating massive debt. It makes it all the more easier and cheaper for the rest of us.
Yep.
what Jetson Boy said…
I completely agree with the cheaper housing benefitting responsible savers, but I’m not so sure that the majority of Americans being debt-addicted morons is a *good* thing. Thanks to these morons (and the entire political and financial system that caters to them), I have been forced to defer considering a purchase for years, while they bidded up the price of basic shelter far beyond reason. Renting isn’t so bad, but it has definitely limited my options.
US$1trillion in credit card debt doesn’t really bother me. That’s around $3500 per capita, and we have an annual income of $45,000 per capita. We’re not as credit-card-debt hampered as we think we are, and there are a LOT of people in these united States who have a ton of cash they’re sitting on, trying to find a venue for it.
This is why there is no need for a banking bailout. We need to bail the Federal Reserve out of our boat and into the ocean and let it sink. When interest rates can float freely, and fractional reserve banking is ended, all that money will flood back into the banks as they raise interest rates for savers to compete for the only way they can get cash. If the banks can acquire easy money from the Fed at low rates, there’s no real competition to push up saver rates. If the banks can only get money from savers, and not money-multiply it for added profit, they’ll raise interest rates significant to get at that money floating in the ether.
We don’t have a banking crisis. We don’t have a debt crisis. We don’t have a credit crisis. We don’t have a money crisis. What we have is a Central Bank, and this is what happens when you let two groups not just create money out of thin air, but use that new money to create even more liquidity out of thin air.
I’ll steal Red Baron’s 4 step plan:
1. End fractional reserve banking, immediately or maybe over 2-3 years by raising the reserve ratio to 100%.
2. End the Treasury/Fed collusion to print new currency, immediately.
3. Let interest rates be set by the market: if banks need money, they’ll offer a higher saving interest rate, if they have too much money, they’ll lower the borrower’s interest rate to get them to borrow.
4. End the FDIC and let depositors purchase their own insurance based on the risk they’re willing to take with banks.
This will solve the banking crisis instantly, immediately and forever.
“‘We’re in a recession. We see it. People are not shopping like before,’ Picon said.
YOU FOOL! We’re in a depression, not a recession. House prices are going to fall even more than futures markets are predicting as the whole housing industrial complex collapses–witness the action in Fannie Mae and Freddie Mac in recent days. The cost of owning a home will fall well below the cost of renting in many areas.
I have been called every name in the book for warning about a depression. I really don’t care. If you think I am full of crap, that’s fine with me. But if my comments help even a few people, they will have been worth it.
To survive the depression, do the following: 1. Get and keep a job. 2. Rent or live in an RV so you can be mobile for your job. 3. Save at least 25% of your after-tax income. 4. Eliminate debt unless you could pay it off if you lost your job.
Keep the popcorn popping,
Red Baron
You get pretty excited about this depression thingy. Who cares what it ends up being called, it’s going to put a lot of strain on a lot of people and institutions, others hardly at all. Whatever one’s station in life, we need to made adjustments and cope accordingly and maybe even try to profit as Ben says. No need to call someone a fool that was basically giving you credit for your insight.
It seems to me a small but increasing number of commenters here really seem to be working themselves into a froth in different ways. Maybe they just come and go in waves, haven’t hung out here long enough to know for sure. Whatever. Dudes, don’t go all coronary or postal on us, there’s a lot of life left to live, good Lord willin’ and the creek don’t rise. This is a once in a lifetime event, but we’ll make it through provided that we don’t collectively freak and turn on each other.
As far as I know, the word “depression” was coined in the early 1930s, because “recessions” were the subject of fear and loathing - the Powers That Be wanted to try out a new, user-friendly nomenclature, and came up with a “Depression”, so as not to scare the sheeple.
There is effectively no difference between a “Recession” and a “Depression”, apart from the present historical perspective of magnitude.
There are, however, two types of recession/depression downturns - inflationary or deflationary. Deflationary downturns are far more scary than inflationary downturns.
Here endeth the lesson.
A.B Dada,
Bravo! You know, some folks already have a head start on your plan. It’s little known ( but growing web-site ) called Prosper.com. Lenders can provide as little as $50 and collectively loan someone with bruised ( or Triple A ) credit as much as 25k. From what I understand the fees are reasonable and the int. rates are much more in line with the real risk.
I hope they do well.
When interest rates can float freely, and fractional reserve banking is ended
If banks had to keep 100% reserves, that means they would not be able to loan out any amount of deposits, and you would have to pay them for keeping your money.
A. B. has floated this 100% reserve idea before and I did the same head scratching:
If a bank reserves 100% on deposits, they don’t have funds to make loans, they don’t make a net interest margin, they can’t pay employees, keep the lights on, afford to pay interest on those deposits, etc. it is not a valid business plan.
100% reserves is like locking your cash in a giant vault and burying it in your backyard - stone age banking.
As far as Prosper.com is concerned, who is making the loan decisions and who are they regulated by? That looks like a losing proposition to me (unless you are the borrower).
Mr. Drysdale,
You’d be surprised. All of the founders are disgruntled former bank reps. They actually adhere to more traditional underwriting standards. Since they don’t have a feedbag topped off by the Fed they are accountable to their lenders directly. There have been cases of borrowers skipping town but relatively few.
They DO report to credit agencies and many borrowers are able to make a few timely payments and then rebuild their credit somewhat and re-fi to a lower rate. They rate borrowers A thru E but I believe they have dropped the E rating altogether.
*Not Investment Advice
The problem is, with no FDIC, I couldn’t trust a private insurance company to actually pay out in the event of a bank failure….
It doesn’t take years to sell a house. Drop the price enough and somebody will buy it - like one of the posters above.
Deep down, don’t ya think the PTB and the agents all wish things would get back to normal? It’s easy, but it means throwing some FBs under the bus. They need to move beyond the cult of the FB and realize that FBs aren’t some cohesive or effective sociopolitical force. They’re just a bunch of schmucks who paid too much and now have their willies caught in the wringer.
edgewaterjohn,
Or “boo-boo’s” ( if female ) LOL!
Exactly, the same way they’ve been able to raise tobacco taxes time and again. ( They’re smokers, they’re just a bunch of disorganized addicts! ) We can pass anything we like!
They need to move beyond the cult of the FB and realize that FBs aren’t some cohesive or effective sociopolitical force.
This poll supports that statement.
I hope that survey is true. I will be very disappointed in America if they attempt to bail out houseflippers and specuvestors. Just because 2 million people tried to get-rich-quick, doesn’t mean they derserve sympathy. Millions of people by lottery tickets every day and we don’t reimburse their losses.
“But he said he is confident that after two or three years, midtown home values will be much higher. ‘I found this to be an advantageous time to buy,’ Riley said. ‘There are mortgage brokers who need clients and need jobs. I think they find creative ways to make it work.’”
Gawd, this poor kid should listen to himself. He actually believes by spending money he doesn’t have that he will help stave off a recession. Phil Gramm would be so proud!
“But he said he is confident that after two or three years, midtown home values will be much higher. ‘I found this to be an advantageous time to buy,’ Riley said.
I doubt there will be any place in the country where home values will be “much higher” in two or three years. There may be very few places where values are merely any higher.
‘There are mortgage brokers who need clients and need jobs. I think they find creative ways to make it work.’”
That worked out so well for so many the past few years. Feelin’ lucky?
‘There are mortgage brokers who need clients and need jobs. I think they find creative ways to make it work.’”
Translation: “I gladly turn myself into a FB so some broker can keep earning a check. Real estate always goes up…I’ll be fine.”
ot-sorry but this happened in long island ny
he is “disabled” has 6 kids three with his wife and 3 with his secret girlfriend who knew nothing about each other and he died trying to “fix” a microwave that was probably $50 from walmart
http://www.nydailynews.com/ny_local/2008/07/10/2008-07-10_man_suffers_fatal_electrical_shock_while.html
Even my FIL who thought he could fix anything haad better sense than to mess with microwaves.
Darwin strikes again…
Darwin didn’t succeed if this guy managed to pop off 6 times before biting it.
Good one, NSO!
It’s been posted before, but the beginning of Mike Judge’s Idiocracy is worth watching and worth a think or two.
Idiocracy is not a comedy.
It is a look into our future.
That is indeed something to ponder.
look again. 9 times.
Sorry - wrong. I thought it said 6 w/ wife and 3 w/ secret girlfriend.
sorry, misread.
http://www.youtube.com/watch?v=C1sE1E3z7jU&feature=related
America, meet your future: Opening scene from IDIOCRACY.
Steps back…Slowly slides my bag of Popcorn…Awaaaay from the Microwave
Steps back…Slowly slides my bag of Popcorn…Awaaaay from the Cellphone
What did he think he could possibly fix in a microwave oven? The embedded microcontroller? Nope. The Magnetron? Nope. The loud bang that was heard was from the (accidental / attempted) discharging of the capacitor, no doubt.
Actually the mechanical safety switches (most microwaves have 3 including backups to prevent microwave from operating with door open) are usually the first component to fail since they open and close every time the door is opened, and can be easily replaced by a novice without getting close to the capacitor. You can do the job yourself for a dollar or pay someone else $100.
Considering the cost of a microwave, I’d just as well get a new one for $100…
If it’s mounted over your range than it’s more like $500 with installation, what would you do then?
We know at least one part of his body was functioning properly.
LOL!
Seems to me that we’re in the midst of a shift right now, or at least starting a shift. Up until recently the housing market downturn has been exerting a strong downward pull on the economy - e.g. reduced HELOC has been forcing people to cut back spending, etc. But now the economic downturn seems to be generating its own momentum, such that it doesn’t so much matter what happens in housing - the economy’s going in the crapper nonetheless. Eventually - when home prices get back to normal - I think we’ll actually see a shift in the opposite direction - housing will actually be attempting to pull the economy *up*, but the economic downturn momentum will be too great - and in that case the bad economy will actually exert a downward pull on housing! This will cause home prices to overshoot on the downside - quite possibly dramatically so I think.
An analogy would be a big ship being pulled on a tow line by a little tugboat - or perhaps in this case a big tugboat. The ship is going fast in one direction (out to sea let’s say) and the tugboat pulls as hard as it can towards the shore. Eventually the ship turns, and the rope gets slack. However the ship starts to get too close to shore, and starts to pull the tugboat along with it. The tugboat then exerts pull in the opposite direction, trying to pull the ship away from shore. Question is - can it pull it away in time to avoid crashing into the rocks?
packman,
As a former sailor I think the analogy is perfect. There was a similar effect when we transitioned fromTech being the primary growth engine to playing musical houses.
The primary reason I’m probably more aligned with say Ben, is that after a stiff and painful correction, Americans will re-discover d-i-s-p-o-s-a-b-l-e income! So consumption will be paid for on a “payday basis” ( vice semi-annual/serial cash-out re-fi fueled spending orgies! )
We will be better off for it.
I, for one, look forward to that day.
I am a firm believer that the so called “Cashless Society”, innovated by the ” Business Powers that Be”, for YOUR convience, had a LARGE part to play in mentality of this entire financial Ponzi Scheme.
The mere idea that paying in dirty old Cash for everyday basics is somehow more burdensome, inconvient and for the uneducated, unwashed and poor, really got WAY OVERSOLD to America. And FOR a very profitable REASON, as many folks are suddenly about to see 1st hand.
Now, I’m not for peeling off stacks of $100 Bills to pay for a car or lugging around a heavy pokes of Gold to pay for a house, but I am old enough to remember that a poor man seldom spent MORE than he had in his Wallet because he didn’t have CREDIT and the stores didn’t take his kids Monopoly Money.
To answer the Question, “What’s IN your Wallet?”, a LOT of people WOULD be much better off SAYING a moldy old $20 than a Capital One Credit Card
mikey,
Right. Like the commercial where everything is humming along just swimmingly until you ( the doofus no one wants to be ) comes along paying in cash and the whole world falls apart. Message? Don’t be that guy!
I have made very decent money in my life. I’ve also made near poverty wages in the military. Whatever the case, I’ve always gotten by on about $20 a week. Cash.
Been there too DinOr,
You were lucky as I always wanted a boat when I was a kid. But the US Gumbermint didn’t give me a boat. They gave me a mobile home called a steel pot and I ran around the jungles lost for about a year with all sorts of very unhappy, short brown guys, evil little green snakes and ants trying to eat me alive.
But on the plus side, I didn’t have much time to blow my funny money on wine, women and wild ways and I did get a suntan
I did unfortunately blow my money on a 1966 Mustang, wild women and beer as soon as I go out off the hospital though
It’s all gravy now
mikey,
Slight correction if you’ll allow me?
It’s ALL gravy now
There, fixed! Even as an adult I went through some tough times during the Tech Wreck. Having been frugal helped see us through. I also ‘think’ it helped prepare my daughters as well. It taught them to enjoy the good times, because they never last. Salt a little away and live beneath your means. Now that they’re married I think it means a lot more to them. Especially w/ $5 gas.
Whatever the case, I’ve always gotten by on about $20 a week. Cash.
———————-
Food, gas, rent, etc.? All you need is $20/week?
The cashless society is a must-have innovation for any Big Brother government seeking to monitor and intrude on every aspect of its citizens’ lives, starting with their sources of income, and how and when they spend their money. Cash [or other accepted currency] in pocket allows one to life off the grid: no such possibility when every electronic financial transaction can be tracked and monitored. That’s why I continue to stubbornly use cash for every possible transaction.
I lived mostly cash-only for two years, primarily because my biggest expense was food at the farmer’s market.
Let me tell you, NOTHING controls your spending like living cash-only.
A cashless society = Those people standing in line at the pawnshop.
Answer…..No.
The whole econony has been turning into a big house of cards over the past 10-20 years.
I wouldn’t be surprised, either, if we saw oversold prices at some point –which is why I think there are going to be some very upset sellers in a few years when they realize that they’re not only never going to get $400k for their very average homes, but at some point they’re going to be praying to just get over $200k. I’ve also been wondering if we might see a scenario like the one you described. I keep hearing that people are losing so much value in their homes. But on top of that we have high gas prices, tension with Iran, higher food prices, etc. The real downturn only just started, too. Seems to me that it can easily spiral down very quickly: continuing high gas and food prices, even more losses in housing values, more foreclosures –then as people are spending less and less on extras and luxury items we have even more layoffs, more Starbucks stores closing –and then what happens when we get major bank failures? What happens when things escalate in Iran? What happens when other countries dump American debt?
Then again I’ve been expecting a major crash for the last 8 years. I may be too pessimistic. But at least I didn’t buy a bunch of financial stocks like my father-in-law did several months ago. He was like: “Wachovia is such a great deal at 25!” I couldn’t understand why anyone would want to buy bank stocks just as the mortgage problem was just starting to be realized and so many people were estimating that it was only going to get worse.
Then again I’ve been expecting a major crash for the last 8 years.
The current government has been very good at kicking the can down the road just long enough to loot and scoot. The next administration will get blamed no matter whose fault it was.
That’s why I don’t envy the next President.
so we are paying for bad loans twice or in perpetuaity ?
bail the bad future loans from fre/fnm forever ?
Just a comment on Brooklyn.
I recall a speech by a city planner who was receiving an award. He had been head of a business development organization in Jamaica, Queens, a satellite CBD 10 miles or so out from Manhattan that fell on hard times in the 1970s.
In the 1980s, there was a big push to attract office-based businesses priced out of Manhattan. Then the early 1990s bust happened. He described the “giant sucking” sound as business after business found they could actually afford the “center of the universe” in Manhattan, and left Jamaica, which didn’t revive until late in the next cycle.
For Jamaica commercial, substitute much of new Brooklyn residential. Not that there isn’t a lot of middle-class demand for housing in Brooklyn, and that any of it need be empty. It’s just that all of Brooklyn is priced for people who, if they were forced to admit it, would rather be in Manhattan.
excellent analogy WT
the park slope,brooklyn heights crowd comes to mind
i would actaully consider moving to brooklyn if it was reasonable
but there is no longer a discount for moving to brooklyn prime as opposed to manhattan
As a prospective buyer, and not in any other way involved in the RE market, here’s my position:
Even though I have enough cash to put 1/3 down on a $500K property, and even though my FICA is 730, I have a decent steady provable income and I actually CAN get a loan, and even though prices in my neighborhood have fallen about 15%, it is still 50% cheaper to rent as it is to buy right now.
Tell me, why on earth, knowing that homeprices will continue to plummet, would I possibly be interested in buying right now when I know damned good and well I can get a much MUCH bigger bang for my buck in a year or two?
I am keeping an eye out for bargains, but frankly, prices will have to drop a whole lot more before I even start to seriously think about opening my wallet.
Nope, the market is screwed for a while. People like me, and that’s a pretty big bunch, are perfectly okay waiting for the knife to finish falling.