A Rude Awakening After Years Of Charmed Prices
A report from the New York Times. “After several tumultuous weeks on Wall Street, New York City seems increasingly likely to fall into recession, many economists and analysts say. To get a sense of what that might look like, one need only cross the Hudson River. New Jersey’s economy has already slipped into reverse. Its biggest employers have stopped hiring, and some have started firing. Its unemployment rate is rising fast, and the values of its houses are falling even faster.”
“Perched on a pink vinyl seat in the first booth of his roadside diner here, Gus Thermenos can hear and feel the financial fear gripping his customers. A foursome of men who worked at the nearby campus of Bear Stearns had been lunchtime regulars, Mr. Thermenos said, gesturing toward an empty booth over his shoulder. But they stopped coming a few months ago. ‘Three of them got laid off,’ he said.”
“With one young child and a second on the way, Mr. Thermenos was also fretting about the falling value of the house he bought in Hackettstown, about 20 miles west. After paying about $500,000 two years ago, he said, it was unsettling to see similar houses now being listed for $400,000 to $425,000.”
“‘How could you know?’ Mr. Thermenos said. ‘We didn’t see this coming.’”
The Courier Post from New Jersey. “A plan to create an estimated $40 million trust fund to help New Jersey residents who have subprime mortgages avoid losing their homes is instead creating a growing controversy. ‘The process being suggested is too costly and too onerous, and it could stop businesses from lending in New Jersey,’ cautioned E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey.”
“There were more than 134,000 subprime mortgages in New Jersey as of June 30, and 32.5 percent of them were in foreclosure or close to it, according to the Mortgage Bankers Association National Delinquency Survey. The state’s housing and mortgage agency estimates another 10,000 to 20,000 subprime loans will fall into these categories over the next two years if the situation continues unabated.”
“‘I don’t think the individuals who were trying to secure these loans thought that at some point they were going to lose their jobs to the degree that jobs have been lost, that the values of their homes were going to decrease to the point that they are less than the money that they owe,’ said Assembly Majority Leader Bonnie Watson Coleman, D-Mercer, before the Assembly Budget Committee last week.”
Gannett New Jersey. “New Jersey homeowners, chiefly the middle class…have to face the twin horns of a much larger beast declining wages and the rampant growth of property taxes. Call it the Jersey Squeeze.”
“The bite that property taxes take out of a homeowner’s wallet is up nearly 40 percent since 2000, a Gannett New Jersey review of state and federal tax data found. And property taxes are on track to claim, on average, nearly 10 cents out of every dollar earned this year — the highest rate in the nation. The New Jersey rate was 7 cents in 2000. The average New Jersey income is actually down about $2,600 from 2000, when adjusted for inflation, according to federal income tax data and estimates for 2008.”
“Douglas S. Massey, professor of sociology and public affairs at Princeton University… and his colleagues in September found that New Jersey has a split-personality economy. Housing costs, property taxes and other expenses are driving low- and moderate-income families out of the state, but at the same time attracting high-income workers who traditionally push up the price of real estate.”
“‘I think the long-term pressures have been toward greater inequalities in income and wealth, and that is reflected in housing,’ Massey said. ‘Geographically, we have become more unequal.’”
The Baltimore Sun from Maryland. “The decline in home prices in the Baltimore metro area accelerated last month - the average fell below the 2005 figure. The average sale price in Baltimore and its five surrounding counties dropped to about $296,000, according to numbers released yesterday by Rockville-based Metropolitan Regional Information Systems.”
“Moody’s Economy.com estimates that nearly 10 percent of homeowners in the Baltimore metro area owe more than or exactly as much as their properties are worth. That’s about 7,700 homes.”
“‘There are areas of the country where … there are many more homeowners underwater than Baltimore,’ said Mark Zandi, chief economist of Economy.com. ‘But all the indicators of affordability would suggest, and inventory would suggest, that prices need to fall more.’”
“Louren Reddick and a partner converted a Baltimore church into four condos, and he’s hoping to get a buyer for the last one by dropping the asking price from $369,000 to about $332,000. The two-bedroom, 2 1/2 -bath property originally hit the market in January 2007. The promise of property taxes frozen for the next 10 years thanks to historic tax credits wasn’t inducement enough.”
“‘If I have to give 10 percent off to move a property, I’m prepared to do it,’ said Reddick, of Frenchman White Corp. ‘I’m basically selling it at cost. … I think right now, you’re getting the best prices you’ve seen in the last 10 years, maybe even longer.’”
“Because buying typically slows down between Thanksgiving and New Year’s Day, this is the time for sellers to act if their asking prices are too high, said Ross Mackesey, a VP at Coldwell Banker in Baltimore. ‘You’re going to wait a while if you don’t do something now,’ he said.”
The Washington Post. “The current crisis is a rude awakening after years of charmed prices and quick sales. Sellers become depressed as their homes stagnate on the market. They get insulted when they receive lowball offers. Buyers feel entitled to a deal and fret about finding the bottom of the curve. The process has become so emotional on both sides that psychologists rank it on par with divorce and even death.”
“‘In this particular climate, I think emotions are the key factor,’ said David Eigen, a California psychologist who has studied the housing market. ‘And the emotions are capital F-E-A-R.’”
“But sellers are not the only ones with outsize expectations. Kathryn Higgins, a New York real estate agent who has a master’s degree in psychology, said buyers have become self-righteous during these economic doldrums. Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
“‘Just because you have the money and you have the mortgage, the seller’s not going to give it away,’ Higgins said.”
“Alicia Caine of Hyattsville moved to the Washington area about 10 months ago and has been hunting for a home in the $300,000 range in Prince George’s County. About two months ago, Caine found a promising prospect in Riverdale. It had been on the market for a while, and the price had dropped accordingly. She bid $5,000 below the list price and asked for help with closing costs. She was soundly rebuffed. Caine then upped the ante to $1,000 above asking, though she still requested some closing help.”
“Still no deal. ‘If you’re not willing to take the asking price, then you shouldn’t have dropped it that low,’ Caine said. ‘I felt like I was being jerked around.’”
“She checked on the house later and found the seller had raised the asking price. The house has since gone off the market, and Caine has become so worried about the state of the economy that she is no longer looking to move.”
“Fairfax’s median sales price was $375,000 in August. That’s nearly a 22 percent drop since August 2007. The last time prices fell lower was in April 2004, said John McClain, a senior fellow at George Mason University.”
“Prince William and Loudoun counties…have been devastated by an unusually high share of aggressively priced foreclosures. Sales in those counties have been climbing for a few months as buyers have been snapping up deals. In Prince William, the number of homes sold shot up 100 percent last month as prices plummeted nearly 42 percent since last year to $251,384. In Loudoun prices dropped 24.6 percent to $335,000, and sales rose by 28 percent.”
“In Fairfax County, about half of the homes for sale are bank-owned properties, said Barry Merchant, senior policy analyst at the Virginia Housing Development Authority. Unemployment in both Virginia and Maryland rose 0.2 percent to near-record highs in August, according to the Bureau of Labor Statistics, a decline experts attribute to the collapse of the housing market in recent month.”
“According to the D.C. Department of Employment Services, 23,600 people were unemployed in August. The number of wage and salary jobs dropped by 400. Contracting, transportation, utilities and information services were among the sectors that lost jobs.”
“‘We’re starting to see people pulling back — they’re not filling jobs they had before,’ said Barbara B. Lang, CEO of the D.C. Chamber of Commerce.”
“Jobs are up in contracting, hospitality, government and health care, but down in construction, telecommunications and transportation, said William F. Mezger, chief economist at the Virginia Employment Commission. ‘What’s surprising in a good area like Northern Virginia, the duration of unemployment is several weeks longer than not-so-good areas,’ Mezger said.”
The Virginian Pilot. “Beth Soliz and her husband purchased their Portsmouth home in 2006 for $252,000. In July, Soliz’s husband was offered a promotion that meant moving to Annapolis, Md. ‘We originally listed the house at $250,000, just to break even,’ said Soliz.”
“When no offers came, the couple worked with their mortgage company to see whether it would let them sell the house for less to pay off the loan.”
“Figures from Real Estate Information Network show just 153 homes have been sold short this year in Hampton Roads. An additional 352 homes currently on the market are listed as short sales. That’s about 2 percent of the nearly 15,000 homes on the market in the region, but real estate experts say those numbers just scratch the surface.”
“‘We’re seeing it more now than we ever have,’ said Steve Rockefeller, vice president of SunTrust Mortgage’s Virginia Beach office.”
“Rockefeller said the long waits during a short sale are caused in part because banks’ lending divisions are swamped with work, dealing with both foreclosures and short sales. ‘There is tremendous volume and backlog,’ he said.’
“Kim Johnson, an agent for Prudential Decker Realty, said dealing with short sales in this market is almost becoming unavoidable. ‘In Northern Virginia, you almost can’t participate in the real estate market unless you deal with short sales,’ she said. ‘Here in this market people could kind of pick and choose.’”
“Some simply cannot afford their monthly payments, whether they took on too large a loan or the interest rate reset on their adjustable rate mortgage. Some have lost a job. Others, such as the Solizes, need to relocate. With no buyers, the Portsmouth couple realized a short sale was the only option, Beth Soliz said. ‘Walking away from it just wouldn’t work.’”
“The couple eventually sold the house for $226,000 and plans to repay the difference to the bank.”
‘There were more than 134,000 subprime mortgages in New Jersey as of June 30, and 32.5 percent of them were in foreclosure or close to it, according to the Mortgage Bankers Association National Delinquency Survey. The state’s housing and mortgage agency estimates another 10,000 to 20,000 subprime loans will fall into these categories over the next two years’
That’s about double the historical default rate from subprime, and it’s happening faster than usual. IMO, New Jersey is about to have some big problems.
‘Kathryn Higgins, a New York real estate agent who has a master’s degree in psychology, said buyers have become self-righteous during these economic doldrums. Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
“‘Just because you have the money and you have the mortgage, the seller’s not going to give it away,’ Higgins said.’
Ah, the good old Washington Post. Still trying to bully the public into believing their market isn’t crashing. Good luck with that.
The problems that will occur in NJ have the potential to be enormous. There used to be much more diversification in the employment possibilities here. We had a lot of Telecom jobs. AT&T was headquartered here and so was Lucent. Lucent was gobbled up by Alcatel and has been doing horribly, AT&T is now the old SBC and most of the corporate offices are not in NJ any more. The pharmaceutical industry is still a huge employer here, but is contracting. That leaves financial services. We have become more and more dependent on Wall Street and we all know how well that has worked out. When you combine declining employment with massive pension obligations you really have the recipe for a disaster.
New Jersey took something for nothing government to the extreme, beginning with the Whitman administration.
Pension enrichments, with no contributions to the pension funds.
Low gas taxes, lots of transportation spending.
High public school spending and lots of small local governments, but low state income taxes and no sales tax on clothing.
Poor people? When you are in trouble go to NYC to be taken care of. When you have money, come to New Jersey to pay lower taxes.
It is what has become the typical American attitude — I want for me now.
It isn’t that NYC can look to NJ for its future, but the other way around — high taxes with collapsing public services, with all the money going to those who have cashed in and moved out or died off.
NJ taxation at the aggregate level is very high. Yes, we have a few anomalies like low gas taxes and no taxes on clothing or food, but when you add up everything my guess would be that NJ is in the top 3 if not the highest taxed state in the country. Property taxes are out of control, our state income tax level is very high and even sales taxes (something that NJ has traditionally used as a competitive advantage) are almost as high as those in NY.
We have an awful combination of high levels of taxation and massive public spending, unfortunately much of that spending is in the pension area, while infrastructure and other areas in dire need of upgrade lack sufficient funds.
It may be very high but it certainly wasn’t in the past, relative to income. It was always at the national average.
See the following.
http://urban.nyu.edu/research/littlefield/section1.html
Of course, when the tax base is regressive, those not at the top may feel heavily taxed regardless of all the income up there. There was one person who tried to change that. Need I mention his name?
Whitman’s borrow from the pension plan to cut taxes, because investment gains will pay for it all administration, came afterward.
http://www.taxfoundation.org/taxdata/topic/44.html
New Jersey’s State/Local Tax Burden Highest in Nation
Estimated at 11.8% of income, New Jersey’s state/local tax burden percentage is the highest in the country, well above the national average of 9.7%. New Jersey taxpayers pay $6,610 per capita in state and local taxes.
New Jersey’s 2008 Business Tax Climate Ranks 49th
New Jersey ranks 49th in the Tax Foundation’s State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: New York (48th), Pennsylvania (27th) and Delaware (9th).
New Jersey Property Taxes: Highest Per Capita in the Nation
New Jersey is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. New Jersey’s localities collected $18,225,594,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, New Jersey collected $3,660,000 in property taxes during FY 2004, making its combined state/local property taxes $18,229,254,000. At $2,099, New Jersey’s combined per capita collections were the highest in the nation.
Also interesting to note that there’s a real F-E-A-R that Merrill could downsize or move out of the area. I hope Lord Abbett stays in Jersey City, lot of great people there at a firm that “sticks to their knitting”.
Still I wonder about “Gus” the diner’s owner? A lot of people that run diners aren’t exactly as dumb as a box of rocks. Be it sports, politics or the market, a lot of these guys know the score. Some of my best clients from the past owned diners. If they’re so stoopid how have they managed to lobby for dirt poor min. wages with such success for so many years?
It is not just Jersey City that will affected by the Merrill acquisition. There is a large Merrill office in Hopewell Junction, NJ that handles a lot of the operation type activities. It is hard to see B of A not closing that office.
AIG, Merrill Lynch, Goldman Sachs, Ameritrade, Prudential, all have presences in Jersey City. They will all be downsizing. The whole area will see significant contractions.
Frank,
I didn’t realize that things were ‘that’ concentrated? With all of the consolidation that’s taken place over the last several weeks, you have only to imagine there will be some pain. Well, LOTS of pain.
Is Cardinal Health still in Franklin Township?
I don’t know about Cardinal. Becton Dickinson is in Franklin Lakes and Stryker is in Mahwah. I can see them both weathering this storm relatively well, but who knows.
Water main break at the Citi office building in Jersey City. Folks heading into the city to goof off
The outmigration from NJ & NY is going to shock the political leaders who are just getting over the shock of what they should have already seen. It’s like these poor shysters can’t catch a break.
If someone gave me a free house, property taxes on Long Island would cost more than I used to pay for a 1-bedroom apt. in Austin, TX, circa 1996.
I paid $595 way back then, while $6,000 a year taxes here are considered cheap, relative to people paying 7-12K per annum.
I paid $600 for a 1-bdrm in Chicago in 1998.
These people are morons, plain and simple.
“The outmigration from NJ & NY is going to shock the political leaders who are just getting over the shock of what they should have already seen. It’s like these poor shysters can’t catch a break.”
$hit…. We’re not even getting close to getting beyond “everyone wants to live here” let alone going into shock. The out migration is still not accepted. I brought one of my colleagues in my office just yesterday and showed him the long term demographic and he still having trouble acknowledging this.
“‘Just because you have the money and you have the mortgage, the seller’s not going to give it away,’ Higgins said.’
========================================================
those who have the cash can afford to wait…no problem.
We ARE part of the privileged class now, and I’ll be as demanding as i want. There are other houses out there and the prices just keep dropping, dropping, dropping…
I love ‘insulting’ the sellers with lowballs.
No @#$#!!! I’ve been insulted by their asking prices for years.
Ms. Higgins, whose living depends on arranging transactions acceptable to self-righteous and demanding buyers, should worry more about sellers deciding en masse that realtors aren’t necessary. Let’s put that degree to work, shall we!
http://www.djkresidential.com/Agent__Bio.aspx
She using her Masters of Psychology to exert psychological mastery onto her potential buyers:
you must not attempt to bargain
you must not lowball
you must accept whatever i tell you
you must not attempt to bargain
you must not lowball
you must accept whatever i tell you
================================================
She using her Masters of Psychology………I dunno but that sorta sounds like a hypnotist to me. sounds to me like she pissed away her money on both her education and her housing.
RE: Buyers feel entitled to a deal and fret about finding the bottom of the curve. The process has become so emotional on both sides that psychologists rank it on par with divorce and even death.”
Whatta sick, materially perverted culture.
Get me a boat ticket to Aussie Land.
Their world is imploding…yet this still want their RE boo boos kissed before the holidays.
edegewaterjohn,
And that is something I just can’t figure OUT! Granted our local market in Portland, OR hasn’t imploded entirely… but we have ample signs of fatigue. Yet through it all we have regular posters there that seem more concerned with their recent ( and ill-advised ) purchases than anything else?
I used to call Craigslist “Where Dreams Are Free”. Now it’s more like a final resting place for BROKEN dreams, and they STILL persist! I don’t get it.
Just like everywhere else in the country, it will end all in due time.
‘There were more than 134,000 subprime mortgages in New Jersey as of June 30, and 32.5 percent of them were in foreclosure or close to it,’
I think they will soon realize that most of these mortgages aren’t worth saving. If they want to put that $40M trust money to good use they should use it to rehab empty houses and get them sold to a buyer at a price they can afford.
Of course, what they really should have done was to enforce existing laws against fraud on the way up. Many, if not most, “subprime” victims were committing mortgage fraud of some sort. Even now government seems unable to face the reality that their pet is feral.
“But sellers are not the only ones with outsize expectations. Kathryn Higgins, a New York real estate agent who has a master’s degree in psychology, said buyers have become self-righteous during these economic doldrums. Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
For someone with a degree in psychology, Higgins seems very confused. Buyers have no need whatsoever to be demanding, so long as they are willing to continue renting and it remains cheaper to rent than to purchase overpriced homes in a falling price market.
Professor Bear,
My thoughts as well. What a waste of a big dollar “education” when after careful analysis you retreat to your “inner child” and say something totally stupid like “sellers aren’t going to give it away”. Such a waste…
For that matter, a graduate degree as preparation for a career as a used home seller is a waste.
Repeal commissions now!
ouro verde,
DON’T LAUGH! I’m suggesting ‘exactly’ that! Thus far it’s been only the lenders ( that remain ) that are taking the hit. What would out of the question in suggesting that solid portions of NAR Commissions be adjudicated toward paying for the Bail-Out?
They made $60 bil. in 2005 alone. Let’s get some bucks out of the NAHB and MBA while we’re at it.
RE: For someone with a degree in psychology, Higgins seems very confused.
It’s not just Higgins…
With the mind-boggling number of people holding advanced degrees which run the gamet in scope and context; it is virtually incomprehensive to me, how the world is in the mess that it’s in.
Just WTF are these supposedly educated people doing?
And what does this say abouts humans as a species?
Education should be about teaching people to think, but in practice it is about teaching people to think a certain way. So all the “educated” tend to make mistakes in concert. At least, that was my experience in higher ed. I don’t know whether it’s always been that way, but I know we could do better.
The more advanced your degree is, the more limited the scope of your education. It actually narrows your career choices as well.
My mom had a BS in nursing - great career opportunities, bad working hours. Then she got an MS in public health and studied the spread of influenza and other viruses - virtually no career options. Last she got an AS degree in computer science - great career choices.
Of all the degrees she got she noticed that the classmates in her public health MS level classes were the most selfish and economically illiterate. They were so focused on public health issues they had no idea about the infrastructure that supported their efforts. They actually thought that money just spouted from the government like an artesian well.
Kinda like when one of our kids was about 4 years old and wanted us to buy him something. My wife said, “We don’t have the money for it” and the kid replied, “Just go to the bank, they give you money.” And a lollipop
Bill, LOL. That’s priceless.
Humans as a species are doomed. Too many of us on the planet for it to support. Culling the herd is the best solution, and it won’t be long before some think tank, or high brow “adviser” comes to that conclusion. I think Kissinger uttered something along those lines a while back. Don’t think that type of thinking has gone by the wayside. Probably not.
This whole paradigm has to change instead of looking for ways to “shore up” this financial mess why aren’t the brains of this outfit thinking about ways to make this life on planet earth sustainable. Instead we have competition in everything run wild, and no end in sight. We not right now at least, might be something around the corner.
RE: Humans as a species are doomed. Too many of us on the planet for it to support.
Some great posts here…I have to laugh at yours though, Azrenter.
I have a best bud who is a family doc and pretty intense about following politics and world affairs.
So I asked him the other night…Well-Dr. Jeff, what’s your solution to all that plagues the world today…
His immediate blunt response…about 3 billion people need to die real quick.
Couldn’t much refute the logic…
Kathryn Higgins, a New York real estate agent who has a master’s degree in psychology, said buyers have become self-righteous during these economic doldrums.
“‘Just because you have the money and you have the mortgage, the seller’s not going to give it away,’ Higgins said.”
Evidently her RE expertise has overtaken her Master’s in Psych. for common sense.
“The promise of property taxes frozen for the next 10 years thanks to historic tax credits wasn’t inducement enough.”
Shoot, who wants that? They may be dropping soon!
You’re so right, Steve. Whenever someone offers you an apparent inflation hedge, you can be pretty sure the inflation is just Not Happening.
“I think right now, you’re getting the best prices you’ve seen in the last 10 years, maybe even longer.”
My sister lives in the Baltimore area. Even at current sales prices, prices have more than doubled in the last 10 years in all areas, and in many areas have tripled or more. This is just a flat out lie.
I agree … prices are still way out of whack in the Baltimore area. Another 20% down to go and then we’ll start to look reasonable ..
I completely agree. While you’ll hear some say Maryland has one of the highest per capital income levels in the US, that statistic belies the fact that most people here can’t afford most of the houses here. That is the problem. Supply vs. demand.
Sellers are still living in the past and the more they do, they more they lose.
Didn’t Shilling say the “last rational real estate market” was 1997? Prices are nowhere near the best seen in the past 11 years.
er, that would be Shiller I believe
1997? I’ll have to agree. We departed from reality and never looked back.
( Also right about the time we changed the tax code too as I recall? )
“Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
Go for the freaking kill — the generation of sellers has already hit you with the equivalent of a $100,000 public sector mortgage, and you can’t afford to spend one extra dime on top of that. Take that national, state and local debt and pension obligation right out of the seller’s hide!
RE: Go for the freaking kill — the generation of sellers has already hit you with the equivalent of a $100,000 public sector mortgage, and you can’t afford to spend one extra dime on top of that. Take that national, state and local debt and pension obligation right out of the seller’s hide!
(applauding!)
Right — and they want you to buy their stocks for high prices too. With what money?
“Part of a Privileged Class”? That sounds like Obama logic.
Since when is responsibility, hard work, and thrift equivalent to “privilege?”
“Part of a Privileged Class”? That sounds like Obama logic.
And to think in 2008, even as President, Obama still can not be a member of the Augusta Country Club, the Masters Home Course. Priveliged class, now that’s logic
Really, David?
Did you bother to check your facts?
Oh! But that was 18 years ago! You can’t expect David to keep up-to-date with rapidly changing events.
Frankly, I’d have a harder time joining exclusive clubs than Barack Obama because of my ethnicity.
A Rude Awakening After Years Of Charmed Prices
Charmed lives living on charmed lies…
“The decline in home prices in the Baltimore metro area accelerated last month - the average fell below the 2005 figure. The average sale price in Baltimore and its five surrounding counties dropped to about $296,000, according to numbers released yesterday by Rockville-based Metropolitan Regional Information Systems.”
Baltimore is one of the poorest cities of its size in the US. The last numbers I saw showed an average family income of less than $50k in the in the City, and around $70k in the suburbs. So we are looking at a multiple of greater than 4. Not healthy heading into a horrible recession.
If the believe the wingnuts around here, “everyone in Maryland is rich because of DC.” That, and we have “affordable, entry level” $400,000 townhouses, and so on. This region will be one of the last to wake up, unfortunately; the delusion is so thick here that many cannot see through it.
Having seen some of these entry level $400K houses, I’ll keep renting. These houses are cheap pieces of crap and not worth $100K.
I don’t have a degree in psychology (thank goodness) but I do recognize denial when I see it. Sellers here are delusional.
“Sellers here are delusional.”
Same here. But I like reading that they’re waking up to the fact they do not have the upper hand in this market, and won’t for a long time.
Hey, pondering. We are in the same general area, right? Near Twinbrook metro station? I got my lease renewal offer two weeks ago. This year they only want an increase of about $70 a month. Last year they asked for an increase of $130 - final increase after I did my research was $0 per month. Several really big buildings have opened up in the area this year. I think I should ask for a $50 reduction.
I too am in same general area (closer to Glenmont metro). Have been looking to buy a TH for some time — it’s just about hopeless. Typical is something that sold for $192 in 2000 — and which is now ‘reduced’ to $408 from $439. I am talking 3br, nothing fancy, in no way deluxe, townhouses. I am renting one for $1600 a month and have a 3 year lease with no increase scheduled.
I got a card from the enormous building across from Grovesnor that I had just one chance to get a 2 bedroom condo for $383K because they were 90% sold out. I wanted to stop by and ask how they had managed to get all the current owners to agree never to sell their condos ever again for all of history (it was the “last chance to own” after all), but decided that the laugh wasn’t worth my time.
Don’t worry. This area is going to be ever so sticky on the way down. It will take a long time. But it will come. In the meantime, I save.
Hey, Polly and all the rest of us in the strange land of Maryland!
I live not far from BWI, but it’s the same crazy stuff around here. “Affordable” $400,000 homes, houses “reduced” to $390,000, all poorly built monsters on tiny lots… meanwhile, falling apart Post-War junk on lots so small that there’s no room for a driveway, much less a garage are going for $250,000 and up. And these houses would barely make $100,000 in the best of times back before the Bubble got going!
Unreal… it is going to take FOREVER for the madness to end here!
Report from Loudoun county (DC exurb). MRIS stats came out last week. Prices are falling at the fastest rate yet now, on a YoY basis. Normally the last couple of years there has been a pause in the price declines during the summer, but not this year - prices continued declining. That tells me this winter is going to be brutual.
Prices are down 20% YoY, and about 32% off the early 2006 peak. We’re approaching somewhat “normal” prices again before long (say pre-bubble plus 5% annual gains) - I think we’ll be overshooting that by a mile. Keep in mind this is from someone who does own a home here - not a renter.
Great News!
I hope to “Brutal-ize” some seller this winter, right after the horrible Xmas season kicks the recession into high gear.
WARNING TO LoCo sellers!
I will NOT pay 700K for a house you bought for 250K in ‘02
Give it up or kiss it goodbye!
Right, buyers shouldn’t let MSM hacks influence them.
Those out there who have read miltary history should know - that when you have an enemy off kilter it is the worst time to become cautious. You must press the offensive and keep them off balance, lest they regroup.
Okay buyers, you know what to do.
Indeed we do.
la dolce far niente
Want my advice? Don’t buy in Loudoun for about 3 more years, maybe even 5 or 10.
The first shoe to fall was the basics of the housing bubble - prices just got too high, and now are falling dramatically in part due to the very long commute to DC. The second shoe is about to fall though when military spending is reduced. Much of Loudoun’s job base is military IT. The bulk of the rest is Verizon, Sprint, and AOL - all of which are scaling back and/or moving services to other locations. Historically Loudoun has had a very strong job base (4% unemployment even in bad times) - that’s in the process of changing though.
Don’t worry Mr. Packman-
I won’t be buying in LoCo this winter unless I can get a 2000 or so price, no more than $100.00 per sq/ft.
I plan on lowballing the desperate & it won’t matter in 5- 10 when I want to sell, I will have bought so cheap to begin with (and hopefully paid off in full!)
I work in LoCo, don’t have the D.C. commute.
After all, isn’t this area “different”?
“Fastest growing County in the US, Silicoln Valley of the East Coast, suburb of the Capital of the World” and all that BS !!
Watching it crater by the Month!
100/sq. Right on.
I’ve been watching condo prices in Fairfax Co. Va. I’ve seen some decent 2 bdrms for under 200K. Things they are a changin…
FWIW - I think prices will end up quite a bit below $100 per sq ft. Actually prices right now are about at about 100-120, so you really wouldn’t be lowballing at all if you offered $100 that this winter.
Out of curiosity - what do you do in LoCo? I’m looking for tech jobs
(seriously)
I own a Business
RE: “With one young child and a second on the way, Mr. Thermenos was also fretting about the falling value of the house he bought in Hackettstown, about 20 miles west. After paying about $500,000 two years ago, he said, it was unsettling to see similar houses now being listed for $400,000 to $425,000.”
“‘How could you know?’ Mr. Thermenos said. ‘We didn’t see this coming.’”
Should have been tuned into the Housingbubbleblog, Mr. T.
Posters from all walks of life saw this debacle brewing 4 years ago.
Bu given your perceptive astuteness I wish the best of luck to all your clients.
hd74man,
But isn’t that the beauty of running a diner? This isn’t some roadside operation in East Jesus, NV? His clientele were from major investment banks. Wouldn’t surprise me if he had relatives that worked for one if not he himself?
Yet when he gets caught with his pants down he can always claim he was just a ____ and couldn’t be expected to know such things?! It is after all; The Bubble Way.
RE: But isn’t that the beauty of running a diner?
Unpretentious, hard-working, producers men eat in diners.
They listen to their fellow coffee drinkers and absorb the anecdotal off-the-street evidence from an array of businesses.
Meanwhile the high rollers sit in their ivory towers surrounded by legions of sycophants, back-stabbers and azz-kissers who delude and mislead them as to what is reality.
It’s like when Stuka ace Hans Rudel had an audience with Hitler as the Eastern Front was collapsing. As he’s noting the areas of Russian break throughs on a topo map, he points to various ground force divisional markers, and asks, “Mein Fueher, what are these?
To which Hitler replies, “Those are my reserve SS panzer and grenadier divsions, which my general staff assures me, will easily blunt this Russian offensive and faciliate a major counterattack which will hurl the hordes back behind the Dneiper”.
Needless, to say when Rudel informs Hitler that these divisions haven’t been existent for months, and are simply pins on a map, old Adolph goes ballistic, screeching-:How can I win war, when all I get from my closest generals and staff are nothing but lies and deceptions”!
Ya can change the time and the place, but a lies and deception will take it all down.
A half a million dollar house is not sufficient to raise two kids?
Let’s talk about the “privileged” class now!
A sign of changing times!
Now Ben is picking out “We didn’t see it coming” quotes instead of “we don’t want to give it away.”
From denial to acceptance!
Of course, there’s anger somewhere in there, too, for many people. I’m working on a graphic for another site that shows a perfect correlation between counties in California with the highest foreclosure rate and support for CA proposition 8 (eliminating same-sex marriage in CA). Though this is misleading–if you map % Church attendance and foreclosure rate you get a similar strong correlation.
Faith-based financial decisions coming home to roost.
I guess buying that statue didn’t help - St. Joseph or ?
“Though this is misleading–if you map % Church attendance and foreclosure rate you get a similar strong correlation.”
That is truly sad, considering how much the Bible has to say about proper money management. But it’s not surpising, when you consider the popularity of the “prosperity” gospel. If only people would READ their Bibles and stop depending on their clergy and politicians to interpret it for them.
Church people should give all their money to the Church first, says the preacher. If only I had the nads to start some Religious thing and bilk the proles for their cash.
Not “all” their money. A percentage.
And I agree. The Bible forbids co-signing loans, wastefulness, sloth, and encourages thrift, wise investment, humble living, and generosity to the poor (ergo, one must work and live below one’s means in order to have enough to give to those in legitimate distress), and it forbids subsidizing the slothful (no work=no eat). Get rich quick schemes (like the housing bubble) are always a time to stop, assess, and think twice. Greed should never be a motivator.
Living simply and Biblically, which includes working hard, caring for one’s family (rather than expecting others to do it), resting one day a week, saving like the industrious ant for the hard times (ie “winter”), and supporting widows/orphans/the poor who are truly, honestly destitute (not just freeloaders and slackers and junkie bums trying to bum cash for drugs), and thinking long-term, not just for today’s pleasure and vanity, is a recipe for prudent investment (not greedy ones) and sustainable living and compassion. It works.
Giving a tithe to legitimate church work, which includes charitable work in the community and abroad–not supporting swank preachers living high off the hog like some televangelists that make me wanna puke–won’t bankrupt prudent folks. It forces one to evaluate the budget and not buy non-essentials if it impedes charity.
It also forces one to be more careful in giving overall. I don’t give to certain high profile charities cause I think the CEO’s are getting rich with outsized salaries off donations from those who make much, much less. And that’s a no-no in my book. And I suspect in the Lord’s, too. I’m careful where I give to help the domestic and foreign poor. But I give with every paycheck, because of that particular religious belief that I ought and I must.
Mir
“If only people would READ their Bibles and stop depending on their clergy and politicians to interpret it for them.”
But doing so would take the wheels of the Religious Wrong voter segment. Worse yet, they’d have to actually practice Christianity and side on social justice issues.
Just an update from the eastern panhandle of West Virginia: 2 corporate owned (coporate moves) homes in our 41 house development sold in August 2008, one for $400,000 and one for $375,000 (verified with the county clerk). The peak price in our neighborhood was in late 2006 at $515,000 for an average house on an average lot (the 2 that sold were slightly above average). New houses sold for $450,000 average in early 2005.
So, we are looking at a verified drop of approx. 28% from peak and approx. 17% drop from 2005 prices (actually contracted in late 2004).
Per a friend’s real estate agent wife, nothing but forclosures are moving right now.
“The bite that property taxes take out of a homeowner’s wallet is up nearly 40 percent since 2000, a Gannett New Jersey review of state and federal tax data found. And property taxes are on track to claim, on average, nearly 10 cents out of every dollar earned this year — the highest rate in the nation. The New Jersey rate was 7 cents in 2000. The average New Jersey income is actually down about $2,600 from 2000, when adjusted for inflation, according to federal income tax data and estimates for 2008.”
About 80% of property taxes goes to support UNION government employee salaries, benefits and pensions. I wonder when the taxpayers are going to wake up…
Have you been following the LIRR scandal?
I think people are just astounded at the fraud.
http://www.ajc.com/news/content/shared-gen/ap/Finance_General/NY_LIRR_Disability.html?cxntlid=inform_artr
This is quite a story - there was a big write-up about it in the Times a while back also. Disability was simply par for the course with the LIRR. Fore!
Oh right, and correlation = causation.
Heh, now selling something for six figures is “giving it away.”
And, guess what? Buyers who have substantial down-payment cash and good enough credit to get a loan in the current climate–those ARE privileged folks. Lord knows I’m not among them, and I would wager very, very few others are. And so: yes, they do get to call the shots. He who pays the piper calls the tune, n’est-ce pas??
“Perched on a pink vinyl seat in the first booth of his roadside diner here, Gus Thermenos can hear and feel the financial fear gripping his customers. A foursome of men who worked at the nearby campus of Bear Stearns had been lunchtime regulars, Mr. Thermenos said, gesturing toward an empty booth over his shoulder. But they stopped coming a few months ago. ‘Three of them got laid off,’ he said.”
Gus’s lunch counter unemployment rate: 75%
I have a question for the NYC folks on this board. What’s up with the hotel prices? We are planning on taking the kids to see the Rockettes in Dec and can’t find a hotel for under $400 a night…and that’s for a Holiday Inn! Any thoughts on other options? NYC is really full of itself. I haven’t been in about 6 years and I am starting to remember why I’ve stayed away! Thanks in advance.
Try this just down the street from me in Sunnyside queens…just 2 blocks from the 7 train which will get you to 42nd st…..or transfer to the N at queensboro plaza and it gets you to 49th and 7th ave close by…
or the Q32 bus goes right down Queens blvd over the 59th st bridge and down 5th ave Stops right in Front of Rockefeller center and the return trip up from Madison ave will drop you off right in front of the Laquinta here in queens…
http://mta.info/nyct/maps/manbus.pdf
http://mta.info/nyct/maps/busqns.pdf
http://travel.yahoo.com/p-hotel-7033916-la_quinta_inn_queens_nyc-i
There are less expensive hotels in Manhattan, but you have to look a little harder. They’re not the big chains. I stayed just a couple of blocks from Times Square last year for about $100 per night when I went to NYC to see a concert at Radio City. Not a luxury hotel, but not a dump, either. Sorry, can’t remember the name of the place, but I recall it was on 45th Street.
try the Newton on bway 95th or Day Hotel on 94th. Rudimentary but usually around $200. hotels.com gets good prices there
-evil
“The Baltimore Sun from Maryland. “The decline in home prices in the Baltimore metro area accelerated last month - the average fell below the 2005 figure. The average sale price in Baltimore and its five surrounding counties dropped to about $296,000, according to numbers released yesterday by Rockville-based Metropolitan Regional Information Systems.”
Oh, boo-friggin hoo!
$296,000 is still WAY TOO HIGH considering the median household income for the state, which is a bit over $60,000. In other words, the houses are still selling for almost 5x the median household income, and once one factors out the unliveable garbage in Baltimore City, the price of housing climbs even higher.
Unreal… we still have a LONG way to go from here.
I’ll look when prices fall below 2002 levels. 2005 was the height of the bubble, falling back to that is nothing.
“I don’t think that the individuals who were trying to secure these loans thought that at some point they were going to lose their jobs………”
So nobody really believed that could actually lose their jobs, despite recent history and current trends? I guess the don’t have any relatives working in just about ANY manufacturing business in the US.
I guess being in a business where you are the first thrown under the bus when the going gets tough is not such a bad deal after all.
“Housing prices, property taxes and other expenses are driving low- and moderate-income families out of the state…….”
New Jersey = Silicon Valley East, “Where only the best and the brightest can afford to live”
“Unreal… we still have a LONG way to go from here”
Pondering, Pondering, my fellow Marylander, don’t you know that BRAC is coming to save us? Don’t you know that all you have to do is sit tight, cover your ears and sing “La-La-La” and chant “BRAC…BRAC…BRAC…” over and over, and your house will sell for 10x what you bought it for, just as God (and BRAC) have decreed?
Base Re-Alignment Commission?
Is that what we’re talking about here?
Yes. The DOD is moving a whole bunch of paper-pushers in the D.C. area to more “secure” locations on or near existing bases. Several Md./Va. jurisdictions are faced with big upcoming traffic issues because of it, and a bunch of deluded homeowners/realtors think it will prop up their fantasyland RE prices in the burbs around here.
Not likely.
The Missle Defense Agency is actually moving out of the DC area and down to Huntsville Alabama. I think for every agency BRACed into DC there are two going out. also some of the agencies in Arlington and Alexandria and Falls Church are going further out to the suburbs in VA. There will probably be no net gain.
If I *had* a house, I’d be part of the la-la folks who expect their house to cost 10x what it does now in a few years… but since I’m on this Blog, you can bet I rent!
Yes, BRAC will “save us” from the horrors of affordable housing! All of those folks are going to sell their overpriced, upside down houses and move to Maryland and buy a house at 10x their income… or so I’ve been told! Hahaha!
Not to hijack the NJ thread but…
Monterey County(CA) prices just released.
September median price came in at 280K. Down 63% y-o-y.
Last time price was at this level - June 1999.
So lady with the masters in psychology - go play in the traffic.
People with cash are so in the drivers seat.
Anyone buying from a realtor in today’s market is just plain stupid.
I was actually hoping that somone would hijack it back to yesterday’s “Killing the Love” thread from last night.
Talk about a “target-rich environment”
Can that be right? Down 63% y.o.y? Assuming that’s true… Good for you guys! Wow, wish we could all see “Pre-Millennium Pricing”! Man, that even pre-dates the Tech Wreck.
O.K, let’s be honest here..? Given all that we know about what we faced in the Post Tech Wreck and what we ARE facing -today- how many would STILL choose 1999 over 2008?
How many would chose to have taken a pass on:
The Bubble ( Part II ) ?
DinOr,
Contact me when you can
rogue@rogueriver.net
Wow, that is amazing. I’d guess the amazing median adjustment has to do with a large skewing of home sales towards the lower end. What’s the change in avg. price per sq foot?
“Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
This statement just goes to show how deep the sense of “entitlement” about home buying has become.
When I bought my first home after several years of saving for a down payment and cash reserves, you bet it felt like a privilege to finally get that mortgage, especially when 98% of my friends were spending every penny they earned on dinners, clothes, cars, vacations, gadgets, etc. I said “no” to a lot of discretionary spending in order to buy that house, which I happily sold for a big profit in 2004.
Lisa,
If no one else is patting you on the back..? ( at least “I” am )
For my wife and I, things took a little bit different turn. We went VA so we sold back vacation time to our employers and did garage sales and sold items my wife was given by her boss along with a small annuity I had while in the service.
So most of the sacrifice came ‘after’ we moved in and couldn’t afford to eat out for about a year or two? We’d pulled out all the stops and didn’t have any “ammo” left for quite awhile.
“‘How could you know?’ Mr. Thermenos said. ‘We didn’t see this coming.’”
One didn’t even have to be familiar with the bubble blogs to see this coming. It should have been pretty obvious to anyone who saw house prices go up 2X-3X between 1999 and 2006 without a similar rise in incomes. My goodness, did anyone think these rises in house prices were logical or sustainable?
My goodness, did anyone think these rises in house prices were logical or sustainable?
Not only do most people I talk to think it was perfectly logical, they also believe wholeheartedly that current prices will hold steady and start rising again in a few years after the market turmoil passes. No one, and I mean NO ONE agrees with me that prices need to drop. I am an island here in the Philly burbs.
I looked at a couple houses this past weekend.
Two places next door to each other, one a rehab, one new construction. They are on a main artery. They’ve been for sale over a year. They had brochure boxes, when I looked at the sell sheet I was stunned. They are both asking 30% over a realistic price.
I had assumed that because the credit crunch and subprime meltdown were now “out of the closet” as it were, sellers would price their properties accordingly.
No dice.
Did you write OVERPRICED on all of the brochures and shove them back in the box?
I’m getting daily emails from retailers announcing “Private Sale. One Time Only”.
Yeah, OK, I need to buy now before I’m priced out forever.
DinOR’
Check out rereport.com
Is that a short sale Johnson, or are you just happy to see me?
“Kim Johnson, an agent for Prudential Decker Realty, said dealing with short sales in this market is almost becoming unavoidable. ‘In Northern Virginia, you almost can’t participate in the real estate market unless you deal with short sales,’ she said. ‘Here in this market people could kind of pick and choose.’”
Guess I need to read the original post, because I recognize that as being a local agent. I’ve emailed them a few times telling them they were stupid/nuts, but they are realtors….. they never get it. They assume everyone either is too poor to afford or gets it and swaps RE.
“The current crisis is a rude awakening after years of charmed prices and quick sales. Sellers become depressed as their homes stagnate on the market. They get insulted when they receive lowball offers. Buyers feel entitled to a deal and fret about finding the bottom of the curve. The process has become so emotional on both sides that psychologists rank it on par with divorce and even death.”
This sounds like a great reason to wait a few more years until sellers have utterly capitulated.
Those who have the cash for down payments and are preapproved for loans feel that they are ‘part of a privileged class,’ she said. She cautioned buyers against becoming too demanding.”
——————
You the seller have the monthly-accruing carrying costs of a mortage for a property you no longer want.
I the buyer have the monthly-accruing interest on money for a house i might want, but with the rising supply have other choices.
Yeah, I think I can be demanding.