$500,000 Is The New Million
Readers suggested a topic on the future of the real estate industry and the housing bubble. “Is there any cause for hope that the NAR will go bankrupt before the housing bust ends? CNN Money. “The number of existing homes sold during November plummeted 8.6% as prices plunged by record amounts, according to a closely watched housing industry report issued Tuesday. The National Association of Realtors said that home sales dropped to an annualized rate of 4.49 million units. That was down from 4.98 in October and much less than the 4.93 million units projected by a consensus of industry analysts.”
“‘The only region where we’re seeing more sales are where bargain hunters are taking advantage of distressed sale prices,’ said Lawrence Yun, the Realtors’ chief economist. ‘About 45% of transactions, nationally, were of distressed properties.’”
“Yun blamed the financial market turmoil for the devastating report. For months, sales had hovered 4.9 million to 5.1 million. ‘Today’s figure reflects the stock market crash that began in October,’ he said.”
“The drop took place despite bargain prices as property values continued their decline. The median existing home sold for $181,300 in November, down 13.2% from a year ago when the median was $208,800. Yun said that price drop was the largest the association had ever recorded and probably the worst decline since the Great Depression.”
One replied, “America is brainwashed that Realtors are ‘professionals.’ It just wont happen.”
To which was posted, “You are a pessimist. I am quite hopeful that once the full potential of internet technology for real estate sales comes to fruition, the traditional used home sales business model will be permanently broken. Let’s both make sure to avoid used home sellers like the plague and only use online shopping techniques next time we buy houses, in order to hasten the NAR’s demise.”
Another pointed out, “In the Herald - Tribune comments section someone refered to the NAR as the sixpercenters. Reminded me of a city youth gang, back in the 80’s, called the five percenters.”
The Bonner County Daily Bee. “Here in Bonner County, the average selling price for residential listings decreased by 7 percent through mid-December, compared with home sales activity for the 2007 period, based on information provided by the Selkirk Association of Realtors MLS. The average time on the local market was nearly five months. The fastest-moving sale took close to three months to close, while the slowest seller hung around for 266 days.”
“In short, there are still more homes than there are buyers and the off-kilter supply and demand cycle that had its roots in the housing boom of 2005 remained a drag on the market during the year that is just coming to an end.”
“One year ago nearly to the day, outgoing 2007 Selkirk Association of Realtors President Dale Pyne discussed how too much inventory - mostly of ’spec’ homes built on the heels of the white-hot real estate market in 2005 - had affected local housing prices and caused a correction in terms of fewer sales happening at lower prices. This month, Lana Kay Hanson, the outgoing 2008 president for the Realtors association, talked about how the correction continued throughout the past year and why she believes there is opportunity embedded in the lower housing statistics.”
“Q: How would you characterize the 2008 housing market? A: ‘It was a continuation of the bad market of the bad market we’ve seen since 2007. But there was some activity in November. It may not be gung-ho - they’re not knocking down the door - but people are realizing they can’t sit back forever.”
“Q: What’s your forecast for when the market might start to move upward? A: ‘I think we’re going to see these lower prices for at least another year, maybe longer. I do think that it’s turning, though. Not that prices are going up, but because people are starting to buy because of the deals out there.’”
“Q: Housing-related headlines in places like Phoenix and Las Vegas are saying, ‘$500,000 is the new million.’ Do you anticipate seeing the million-dollar listings going down in this market? A: ‘They’re already down. If someone had a listing for $1 million-plus in 2005, it’s probably in the $700,000-plus range now. Those properties have already taken the hit. Nobody was sheltered from this. But it had to come back to realism. Everything was getting out of range too fast.’”
“Q: Did the upward price spiral that preceded this correction start in 2005, or did it begin even earlier? A: ‘It really started in the fall of 2004. I remember seeing the statistics for home sales that November and December and realizing at the time that we really hadn’t seen anything like it before, as far as how many things were starting to sell during the winter months. Unfortunately, some people are still thinking their property is worth those 2005 prices.’”
“Q: It used to be said that we run about five years behind California as far as what the housing market is doing. Does that still hold true? A: ‘Yes, but it’s shortened to about three years. We’re really riding behind all of the other markets that are having tough times.’”
“Q: So there are some good buys because of tough times? A: ‘Extraordinary buys. There are some fabulous buying opportunities right now. But what I’m finding is that the new buyers - people who are just coming into the market for the first time - think they can get it for even less.”
“Q: With the lower sales price trends over the past couple of years, could they be right about waiting out the market a while longer? A: ‘I think we’ve hit the bottom, price-wise. We’re there. It may stay level for a long time, but as soon as more money comes into the market, prices are going to go up. It’s always the same story and it’s the same thing I’ve seen over the years. If you’ve got the money and you don’t buy in a market like this one, you’re going to kick yourself in 10 years.’”
New Years wishes:
That despite everything, Obama does something productive with the ‘bailouts’ and focuses on infrastructure and energy.
New Years resolution:
I will not buy anything that the price for it does not reflect the severe economic distress that is ongoing.
-
Best Wishes
Love you Muir, give ‘em hell. Don’t forget to cut the Realtors out of the deal.
“… Obama does something productive with the ‘bailouts’…”
I wish that as well. But as the saying goes, wish in one hand and sh1t in the other and see which one fills up first.
The special interests will still tell congress where they want the money spent, and after collecting the campaign contributions, congress will comply. Productive? Only by accident.
We have the best government money can buy.
Dear Freddie Mac and Fannie Mae.
Please DON’T FORGET to Feed the Squirrels !
Sincerely, Concerned Taxpayer
mikey
*Clink*
To Ben and my fellow posters -
HAPPY NEW YEAR!
Leigh
To all of the Ex-owners of the:
Make Your Own Candle Shops
Doggy Day Cares
Doggy Biscuit Companies
Cute Coffee Shops
Scrapbooking Shops
Gift Basket Shops
And every other Cute little Shop, that some one with too much spare change said two years ago…..you know what this town needs….and then with her girlfriends blessings opened it with her home equity, 401k and inheritance money.
May 2009 be the year that you realize things have changed. People will still buy some of that crap, but only a few can REALLY, REALLY AFFORD IT! Those that can’t are now trying to keep a roof over their heads and really don’t care if they have a nice candle they made all by themselves, they would rather feed themselves beans and rice than feed the dog a $5 biscuit, and very few pictures are scrapbook worthy. And if they are worthy of the scrapbook, they speak for themselves.
To all of the HBB’ers have a great 2009. It is going to be interesting to be sure.
Great rant, Ken!
NAR will go bankrupt ??
I think there is a possibility even though it would likely remain in some skeletal form mainly with “Buyers Brokers”…The action that would need to occur (Which NAR feverishly fights) is legislation that would allow Banks & Thrifts to offer real estate brokerage services…It would obliterate the commission based independent contractor model as we know it today…Wal-Mart & Costco would also get in on the action….NAR will go to its death fighting this type of legislation…
“Is there any cause for hope that the NAR will go bankrupt before the housing bust ends? ”
Oh one can hope. As a matter of fact, as I am quaffing down Dom P later tonight, I will do my best to put in a little prayer that the NAR goes under in 2009.
I’d just be grateful if he puts his shirt back on. Yucky.
Here’s to another year of great opportunities for us savers. 2000 prices just around the corner. Once we put all money back into the stock market at the bottom, and buy a home in 2010, retirement by 50.
Thanks for the ride America. It was a hoot. Funny as hell. I don’t think I can ever hear the term “real estate investor” again without giggling uncontrollably.
I am still looking forward to seeing the first MSM article this cycle that reports “Real Estate is the Worst Possible Investment.”
It’ll happen. Give it time.
Delusions are not easy to end.
Worst Investments of ‘09: Madeoff or Real Estate?
A lot of Madoff investors were being screwed for over a decade.
“I am still looking forward to seeing the first MSM article this cycle that reports ‘Real Estate is the Worst Possible Investment.’ ”
Me too, ‘cuz that’s when it’s time to jump in.
Not there yet…the MSM is already mindlessly blabbing away about recovery before capitulation took place. That is known as putting the cart before the horse.
Wall Street Journal
* REAL ESTATE
* DECEMBER 31, 2008
REIT Rebound Hinges on Credit Thaw, Recession’s Depth
After a Brutal 2008, Industry Observers See 2009 as Year of Survival and, Possibly, Revival
By ANTON TROIANOVSKI
As their worst year on record finally ends, real-estate investment trusts are bracing for a Darwinian 2009.
The survivors will be companies with lots of cash, small development pipelines and low debt loads. Those REITs could use the industry turmoil to expand by snapping up assets on the cheap. Some of their debt-laden competitors, on the other hand, could be goners if the credit freeze continues.
“You’re going to have this bifurcation of the REIT industry into haves and have-nots,” said Mike Kirby, who analyzes the industry for research firm Green Street Advisors Inc. “The REIT industry haves are going to be viewed as having very exciting growth opportunities, whereas the have-nots are going to be in hand-to-hand combat to fix balance-sheet problems.”
Right on sister.
In this vein, would like to announce at this time that the RER portfolio is up YOY. Not by very much, but still the fact that I’ve beaten just about every stock equity fund in America really makes my day.
Happy New Year!
Okay, now that I’ve gotten that off my chest, I can head downtown and pretend that I’m in the same shape as everyone else.
Don’t think gloating is good for business.
Way to go RER.
“America is brainwashed that Realtors are ‘professionals.’ It just wont happen.”
States regulate the licensing of real estate sales people. This provides a legitimacy that is a tough nut to crack with regard to how they are perceived by the general public. As long as states continue to provide this legitimacy, real estate salesmen will still be around and continue to be trusted as a place where people can get honest, legitimate help buying or selling RE.
I think the problem is that the average person does not buy/sell that many houses and the time period between is often decades. There is just not enough repeat clientele to worry about screwing over your clients.
Are you suggesting that if “real estate professionals” are entirely unregulated, the public will stop utilizing their services simply because they smell of illegitimacy?
Not sure what would happen exactly. The govt licensure certainly adds legitimacy.
Generally I would guess there would always be some sort of brokerage/sales function. Some people, for example, simply don’t want to have to deal with meeting people to show their own house.
I would say in general the added legitimacy makes deceiving the public easier and also increases the price these folks can consistently charge. Without it, there would be a tendency for buyers/sellers to be more suspicious, use those services less, etc.
I’m not trying to make an absolute statement about where we would land, only thinking in terms of trends. Without the govt legitimacy, there would be a trend toward less trust which is a significant component of the justification of the prices they currently charge.
Government licensure? Hell, I never knew that they were licensed. In the past, I just assumed that that was where you *had* to go to buy a house. And before all of the computerized search engines that have cropped up in the last 5 years (I’m discounting that dreadful realtor.com), that was the only place to find a house.
Today…well, I don’t see a point, at least on the buyer’s side. OK, maybe if you are from out-of-town, but still, the 3% that they seems awefully high considering today’s [still] inflated prices. For someone who lives in town and has done much of the legwork themselves [me], anything other than an Re lawyer is a waste.
bluprint,
But Ahhhh, if there were some teeth behind that license! As I mentioned yesterday, by continuing to allow these clowns to “specialize” it stacks the deck against the buyer. They’ve GOT to stop dumbing down the exam to “be inclusive” and start cutting nuts.
Why does the rank and file realtwhore always show you a SFH? Because he has no understanding of rentals or how to expense out an apt. building! And NO, contrary to popular belief it is in fact rare indeed to find a property that one could either live in AND “rent out”! So they go on w/ their pocket/”exclusive” listings being more than well compensated for being one hit wonders. Why change?
At the very least, being a licensed R-E agent should get you excluded from any housing bailout offer! This means no loan adjustment, no cramdown, and you’re not off the hook for income tax on forgiven debt.
A licensed R-E agent can’t argue that she didn’t know what she was signing, etc.
Yet, no lawmaker has ever excluded licensed R-E agents and mortgage brokers in any proposed housing solution.
(When I wrote to Anna Eshoo about this, as per usual her computer picked out the word “mortgage” and sent the usual “Anna is doing everything she can to keep house prices high” form letter.)
reuven,
Most excellent point. Wouldn’t you think that would only be so much common sense? Instead they’ll use their “intimate knowledge” of the industry to carve out the best for themselves and leave the rest.
But think of it this way? If I were -only- licensed ( and had rec’d but the most cursory of training ) in… Wyoming AAA Rated Tax Free Municipal Bonds and you come to me for “advice” on what to invest in..!? Well what the hell do you THINK my answer is going to be!
In order for these people to be able to call themselves a Realtor (TM) you’d think they’d at least to have ’some’ grounding in areas outside of stinking SFH sales. For crying out loud, please tell me you know something more than condoze in Milpitas, CA?
I agree - professionals are generally people educated to post graduate level. Doctors etc. Not morons who took a 6 week cram course in Real Estate and passed an easy test. Realtors are no more professionals than used car salesmen are professionals. and appear in many cases to hold true ethically as well. I do not know how many times I got the buy now or you’ll never get in, real estate always goes up and “don’t worry about the financing terms you can just refinance in a couple of years and take a vacaton at the same time pitch. I always rejected this telling them I believed real estate was in a serious bubble and would collapse in a few years. They were like “I would not count on that..” At which point we parted ways…
I held an RE Salesperson’s License for 8 years. Took a 6-month community college extension course to get it and probably at least 9 strenuous hours of ethics courses or such to maintain it. Only sold one house to a friend and rebated him half of my commission. Was in it for the knowledge, not the $$$. Got an MBA after returning to community college and university - total time of seven (7) years. Big, big difference. Never bought a Hummer or got a HELOC.
Some RE agents and brokers are golden and will survive because they deserve it. Most. I dear, are ill-educated opportunists whose time has, fortunately, passed. Goodbye to 2008. My wife and I will not miss you as a year, an era, or an administration. Good Bye and Good Luck!
Please God bring us CHANGE!
Real estate agents are “pro’s” huh? Haven’t we had this discussion before?
Yeah…. Real estate agents are pro’s alright. prophylactics maybe.
“I think we’ve hit the bottom, price-wise. We’re there. It may stay level for a long time, but as soon as more money comes into the market, prices are going to go up. It’s always the same story and it’s the same thing I’ve seen over the years. If you’ve got the money and you don’t buy in a market like this one, you’re going to kick yourself in 10 years.’”
Another in an unlimited supply of buffoons, he has never seen what is going on now, ever. This fellow should stop thinking, it does him no good. We are in totally uncharted waters, the odds are anyone buying at this point in time is going to be kicking the hell out of themselves for years to come. 2009 is not going to be pleasant for most folks, we may be looking at a correction somewhere between 2011 and 2015, way,way to much excess and it will be wrung out.
Wealth and credit are being destroyed at a rate unprecedented in nearly everyone’s lifetime, and real estate agents keep trotting out the same old crap, hoping people can be frightened into buying junky tract houses and impossibly sterile condominiums that still cost way too much. My prediction for 2009 is that, by December, housing prices nationwide revert to where they would have been had there been no bubble.
On another note, Happy New Year to everyone, especially my fellow Floridians — it seems like forever since I found this blog and first posted here in 2005. I get the distinct impression that the blog is winding down, as what we’ve said becomes the new conventional wisdom, as the bubble has metastasized to threaten the entire global economy, and as bubble-specific articles become more scarce. If and when Ben pulls the plug, I’ll take that as a strong indication that it’s really time to buy.
Happy New Year, snake charmer. I, too, started here in 2005, after selling my dwelling at the peak, splitting the cash with the ex and becoming a renter. I must admit, for me the renting experience has been a little weird, but I’m looking forward to getting that little concrete block shack pretty soon and enjoying Florida little more.
I never knew that was your “story”, Palmy. Way to go getting out at the top.
Yes, I too, thank Ben for making me think about what I saw, felt, read and ingested with respect to the bubble.
We had always done well with a small flip now and then to move on. But something smelled bad in the oughts. 100% price for a SFR?
This blog made me take the step of acting on my beliefs in 05, People say we were smart, I say we were lucky to find a group of bloggers who were not blowing smoke but thinking about the facts. I found such thoughts to be right on, and three years hence, thanks all.
Now we must help those that are being screwed by the banks. Yes they made a mistake and bought all the crap, but they are getting nothing whilst our Gov. helps those that allowed this to take place. Time to modify, or B.K.
Bear in the House.
Buy now or be solvent forever!
snake charmer,
Oh… I think collectively we’ve morphed into something entirely different long ago. Even though “our” point has been made ( with an exclamation point I might add ) it would be a real shame to see a disbanding. That’s something you do when a job is done.
We’re far from ‘that’. I can’t count how many terms and clever phrases the MSM pilfered from here? Had it not been for the BB’s, would there have been mainstream OUTRAGE against the bailout? Doubt it. Along with Ben, I’d probably prefer to see more of the posting directed toward “the solution” and it will be the rejection of positive and sound reasoning that would lead to the demise ( not a lack of enough ‘dirt’ to go around? ) IMHO
DinOR ….I have also noticed that the Talking Heads are using many of our
terms on this blog and lately their themes are right out of the talking points on these threads . Lets face it ,when they need to come up with hours of things to talk about on those shows ,this blog is a good source of ideas for topics . Even the questions they ask now are far more probing , but its happening way to long after the horse is out of the barn . You would think that these talking heads would have a vested interest in the crisis being handled correctly .
I’ve literally seen quotes lifted from this blog, almost word-for-word, and printed in the MSM just a day or two after it was posted here.
IMHO, there is no doubt this blog has provided the basis for much of the MSM reporting.
Not that I mind it…the whole point of this blog is to disseminate information.
On another note, I spent time down in California over Christmas and seeing the ubiquitous $50,000 SUVs, I kept thinking to myself “these are rolling billboards saying ‘I’m upside down in my mortgage.’”
Exactly! And boy are there a lot of them!
There should be a new bumper sticker: “Ask me about my SUV”
Or a bumper sticker saying ‘My ONLY car is this and PAID for’ on a Toyota economy car - in answer to bumperstickers on POS cars saying “my Other car is a …”
… bicycle.
“…bicycle.”
Yup, a Ti Serotta!
I don’t see the need to advertise whether my SUV is paid for or not. The fact is, I negotiated the price by phone and walked in and paid cash this summer. The dealer admitted he makes more money financing, and was not expecting payment in full. I’m still receiving offers for discounted new vehicles….like I really need another car, NOT.
Won’t cramdowns serve to help underwater helocked home-and-SUV owners pay off both their underwater home mortgage and automotive debt in one fell swoop, courtesy of the lender?
Bonner county contains some really pretty scenery, e.g. Lake Pend Oreille and the twin Priest Lakes. But I’m not sure how far that goes in RE terms. I wouldn’t mind a vacation home there but there aren’t many jobs that far north.
DennisN,
Who needs a house up there when you can have a houseBOAT! We rented one up on Priest Lake and it was a real gas! Totally care free lifestyle. The real value is that if you don’t like your neighbors, just weigh anchor and find another island.
I’m still convinced it’s the way to go. Oh, they won’t let you take the boat to the Upper lake but there’s plenty of “there” there.
( Is everyone else -already- as tired of ‘that’ one as “I” am? )
“but as soon as more money comes into the market, prices are going to go up”
Half a pearl of wisdom from the mouth of a simpleton. The key is that the “more money” is gone. I suppose that the greatest expansion of credit in history will happen again;
When noone remembers the names of any of today’s leaders,
When the children of people who lost their ass on a house flip, or a stock portfolio, or commodities speculation, or a retail business in this decade are in nursing homes,
When it is again quaint and humorous that old folks keep a cupboard full of food and a stash of money, just in case.
but people are realizing they can’t sit back forever
I’ll sit back as long as I damn well please, thank you very much.
But the “Post Super Bowl” buying frenzy is right around the corner!
Is it that time of year already? Geez…
Which Super Bowl?
I will buy a house after the Super Bowl. I’m just not certain which one.
Some time after the last one. And the next one.
You misspelled Souper Bowl. (For those who are not long-time posters and readers here, we had a running joke a couple of years ago that the housing market would pick up again “after the Souper Bowl.”)
Now the Souper Bowl is here, but the housing market bottom is nowhere in sight.
And another other running joke - the cupcake lady in CA. This one is a classic!
I’m with you. I just watched a squirrel bury an apple in the back yard, saving for another day. Then he went back up the oak to snooze.
Never saw a squirrel bury a whole apple.
The good news: it was a young’un, so some are learning to save.
Previous for patient renter. Got jumbled in with the football lore…
A question for you Real estate mavens:
We sold are ranch a little over a year ago with
the closing today. We were given a very nice down
payment and the new owner elected, with our
agreement, to rent until the closing. The structure
was set up this way for both of us to benefit from
some tax loopholes that would benefit both of us.
Neither of us were happy with the RE agent and
a couple of his blunders that we had to correct.
His contract is up today along with the closing.
We just received word that the closing might not
happen today and if not, would close on the 5th
of January, ‘09.
My question is this: does the REA have to have
us sign an extension on his contract if the registration of the deed takes place later than stated?
Rancher,
As much as it pains me to say this, I probably wouldn’t stiff the guy. I think it’s witness to his incompetence to allow the closing to fall outside… of the terms of his contract and he’d deserve it. But still I couldn’t do it.
I -would- let him know you weren’t at all happy but he probably couldn’t care less. They’re just so uuuuused to people not being happy w/ them. I’d make damn sure I never use one again though.
In essence, I won’t sign an extension just to
make him sweat this weekend. I wouldn’t stiff
him the 6 figures he has coming and he’ll know he
will never handle any more deals from me.
The buyer feels the same way and we’re
pretty sure he’ll be out of the business this year.
To many people know how badly he screwed up and if the buyer and I had not gotten together
and straightened things out, our attorneys could
have had a field day with this jerk..
Right now he’s petrified that I’ll instruct the
title company to not supply the funds for his
commission.
schadenfreude
What state?
She broke the contract??
If so, hire an RE attorney to close.
Best - Happy New Year!
Leigh
My answer is based on the assumption that this RE agent brought the buyer to the table.
In my state (Michigan), RE agents typically have a clause in their contract where if they show someone a house, and within X number of days after the contract expires that buyer buys the house, the agent is still entitled to a commission. You might want to check for something like that.
Barring that, if you actually get to a closing on the 5th, I’d still cut him/her in. If there’s another delay after that, I’d say hasta la vista baby.
are = our (long lunch)
And a Happy New Year to all the HBB’ers! I almost never post, but do read the blog every day, learning a lot from the other posts.
Hmm, when I click on a “reply” prompt, it’s not working. Let’s see if I can post a new comment…
I want to reply to PB’s hope that MSM will characterize RE as the worst investment. Well, we are almost there! TODAY, the Yahoo Finance page has a list of the “10 worst assumptions of 2008″ and the very top one on their list is, real estate always goes up.
Happy New Year to all on this blog. I got caught short on some international investments and some oil and gold trades as I expected the goverment to inflate and the dollar to collapse but otherwise stayed out of harms way thanks to this blog. God bless Ben Jones and all the other posters here. Wish you all a Healthy, Happy and Prosperous New Year!!!!
“Q: Did the upward price spiral that preceded this correction start in 2005, or did it begin even earlier?
A: ‘It really started in the fall of 2004. … Unfortunately, some people are still thinking their property is worth those 2005 prices.’”
_____
The last sentence doesn’t absolve one from the comedy of the first sentence.
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