‘The Cycle Is Going The Other Way’ In Boston
The Boston Globe has this update. “After five red-hot years, home sales have cooled north of Boston and across the state. Gone are the days of multiple bids, price run-ups, and fast sales. Falling prices, rising inventory, and longer selling periods are now the norm, industry watchers say. ‘We’re at a turning point,’ said John Bitner, chief economist at Eastern Bank of Lynn. ‘The upward movement has definitely turned the other way. It’s a buyer’s market.’”
“Home sales in Massachusetts dropped 8.4 percent from January to March, compared with the same period last year, and 13 percent over the last 14 months, according to a report issued last week by the Warren Group. In March, home sales and prices dropped 1.5 percent, with the average selling price falling to $325,000 from $330,000 in March 2004.”
“The slowdown has left a glut of homes sitting idle, and hundreds of homeowners waiting impatiently for the chance to downsize, trade up, or move closer to family or even out of state for a job. Currently, 2,279 single-family homes are for sale north of Boston, a 48 percent increase over April 2005, when 1,538 homes were listed.”
“Eric and Denise Kerble of Swampscott put their spacious Colonial on the market in January for $399,900, betting it would sell fast in a seaside town where the average price tag on a single family house is at least $100,000 more. Now, after more than 100 days without an offer, the Kerbles have dropped their price to $394,900.”
“The couple paid $206,000 for the gray, 1,586-square-foot house eight years ago, outbidding several other prospective buyers. They said they have since spent more than $25,000 on upgrades.”
“‘We hope this does the trick,’ said Denise Kerble. ‘Lots of people have looked at it, but nobody takes the next step.’ The Kerbles are one of the many Massachusetts families living in limbo, trapped in a suddenly stagnant real estate market that has forced them to put their dreams on hold.”
“In Middleton, competition from new homes for sale on East Street prompted Patrick and Susan McIntire to drop the price on their Colonial that they first listed at $419,900 in November. The house is priced at $399,900, but still has received no offers.”
“‘We don’t want to give our house away,’ said Susan McIntire, who hopes to find a house with more land in New Hampshire. ‘We’ve put a lot of sweat into it. But it’s also very frustrating trying to sell a house now. There are more places to live than people looking to buy.’”
“Local realtors say the falling prices and longer marketing periods show the market has come back down to earth after years of skyrocketing sales. With inventories climbing, sellers no longer can name their asking price. ‘Things are much more realistic now,’ said Claire Dembowski, a broker in Swampscott, who is also the listing agent for the Kerbles’ house. ‘Sellers had the advantage for a long time, but now the cycle is going the other way.’”
Thanks to the reader who sent this link in. Here is another Globe report on housing and migration.
‘The numbers suggest Massachusetts suffered a net loss of 42,000 people a year on average from 2000 to 2004…Of course, extreme commutes and exurban sprawl are symptoms of one of the state’s biggest barriers to growth: unsustainably high home prices.’
Yet another juicy report of a YOY price decline.
More to come..
We’re four of those 42,000 who have left MA during those years. I’d say if you’re talking about MA you’d have to list the crime rate in too many of the even middle priced communities as a factor for people leaving. And MA schools in all except the higher priced towns are rated as pretty average compared to lower priced markets elsewhere.
BTW OT but every time I go out I see more SOLD signs. Even on the rural dumps on the way to Walmart (which 4 me is 40 min away) I think anything entry level is selling no matter what shape its in.
Had to come back to MA after 30 years to help with elderly parents.
A truely horrible place…
Traffic bordering on gridlock, endless lines, rip-off service sector, loud, rude, arrogant, smug, self-centered, NIMBY’s everwhere.
As the saying goes, location, location, location…
Don’t look now, but the 30-year bonds are pushing 5¼. Next stop, 5½. Hope you locked in fixed rates last year.
I thought the fixed rate is based on 10 Yr, not 30 Yr.
Fair enough, the 10-year yield is at a new high too, 5.13% right this minute.
It would be nice to have the option to adjust the hour on these posts, that GMT -/+ hours thingy.
Mortgage rates are not based on Treasuries per se. Mortgage backed bonds competed with them, though. So, in essence, when the yield on Treasuries increases, mortgage backed bonds need to pay, and to pay more they need to charge you more interest.
BubbleTrack.blogspot.com
Put it another way, when Treasury prices fall, MBS prices (on a risk-adjusted basis) become less attractive in comparison. So they must fall in price as well until (higher) demand matches (lower) supply.
Question for ya: In a rising rate environment, doesn’t the duration of MBSs rise? Negative convexity, less refi risk and all that. So in the current climate wouldn’t MBSs behave more like the 30yr bonds, especially regarding volatility, and less like the 10yrs? Maybe I’m completely off-base, but the CFA exam was a long time ago.
Lo and behold, looks like most lenders are ratcheting up their 30-year fixed rates to 6½ this morning.
I heard Bob Brinker this weekend - a guy called who used Neg Am loan on 2 fixer-uppers. He asked if he should re-finance into a fixed rate, but if he did that he would not have the money to fix the 2nd house and rent it out. Bob said to keep the Neg Am loan and make the repairs. Bob thought rates wouldn’t go anywhere.
I thought that was a little odd.
Brinker’s great on the stock market, but when it comes to RE his advice had been downright deplorable. He’s not quite Lereah, but his sunny California-esque “nothing bad could possible happen with RE” outlook just doesn’t jibe with with his whole market-timing strategy.
I’d have to agree…I’ve done extremely well with his stock market timing recomendations, but I tend to discount anything he says about real estate.
Brinkers advice on RE over the last 2 years ought to be considered professionally incompetent. You can put Dave Ramsey in the same category. Both refused to even admit there is a problem.
(“The couple paid $206,000 for the gray, 1,586-square-foot house eight years ago, outbidding several other prospective buyers. They said they have since spent more than $25,000 on upgrades.”)
Geez. So sell it for $331,000 and book a $100 profit (50%) for those eight years, and stop being so greedy!
This was my exact reaction to this article. They could have at least used an example of a family who bought last year and is now getting screwed when they need to relocate, as I actually met such a family last month when searching for a house. I feel no sympathy for the greedy couple they use in this example.
Also, Swampscott is a god awful commuter location.
Awful commuter location? What are you smoking? Swampscott is excellent for commuters who work Boston. You can pick up the Commuter Rail and be at North Station in 20 minutes. Likewise, Wonderland is a 15 minute drive. Swampscott might suck if you worked somewhere on 128, especially south of 93. But it is a prime location for people who have to commute to Boston.
Yes, that reliable stalwart of the MBTA..the Commuter Rail. 20 minutes? You’re the one smoking something. And it may take 15 minutes to drive to the Blue Line (down the Lynnway? I dont know about that even) but then how long does it take for you to train it into say, Copley? A long ass time.
I’d offer the greedy bastards about $225 just to chill them down. $5 reduction is a joke. Try 50K
Wow, they dropped their price from $399,900 to $394,900 … a whole 1.25% drop. They are practically giving it away! I mean sure, at $399.9 you aren’t going to get much interest, but at $394.9….who in their right mind could say “no”. You are looking at savings of $25 per month on a $2,300/month mortgage. Let the bidding war begin!
On a serious note, people like this will always be one step behind the market. Unless they get serious, they will chase the market all the way to the bottom.
“Geez. So sell it for $331,000 and book a $100 profit (50%) for those eight years, and stop being so greedy!”
I thought so too! Homes here in the $200s are usually dropped $10k at a time so I thought they were real stingy only taking $5k off a home of that price. As a buyer I know reductions don’t even get my attention unless they’re that much (and that’s a holdover from when I shopped during the bubble)
Zip Realty:
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=70309140&page=1&property_type=SFR&mls=mls_boston&cKey=tczpfz5r&source=MLSPIN
(“The couple paid $206,000 for the gray, 1,586-square-foot house eight years ago, outbidding several other prospective buyers. They said they have since spent more than $25,000 on upgrades.”)
If you factor in real inflation (as opposed to the cooked inflation rate conjured up by Uncle Sam’s “hedonic” calculations), this couple isn’t making out as well as a straightforward asking-price relative to 1998 purchase-price might indicate. Still, their paltry $5K price drop after sitting on the market for 100 days is a joke.
Where the hell is all this demand coming from, anyway? Who is clamoring to live in Massachusetts right now? Alternative-lifestyle couples getting married?
They would be perpetual DINK’s…
After five and a half years in NYC I’m looking forward to moving back to MA. The husband and I have family there. It’s a relief to see that the correction will be underway as we’re heading up there next year.
And, your NY house will be less by then too
BubbleTrack.blogspot.com
We rent an apartment in Brooklyn, and are debt-free and saving $$$$.
Actually when I read this article of downward pricing, I started to dream of asking my h to go back. I will probably wait till the kids are done high school but I dream of going out on that sailboat off the north shore ALL THE TIME! Today is a gorgeous day here. But earlier, as I listened to an old U2 song that reminds me of my time in Marblehead, I was VERY VERY nostalgic. Going back to the Cape would be ok too. I just won’t take my kids back to crappy schools and bad crime.
Besides people may not be aggressive here (like MA is known for), but they’re passive aggressive! And that has is its own set of issues!
I must beg to differ…aggressive is NYC, MA is plenty passive aggressive indeed! That yankee wall-building and all…
Marblehead is just gorgeous though, can’t argue with that! I had fun there just watching those sailboats from the hills overlooking the water there years ago, though the only U2 song that reminds me specifically of MA is Gloria, associated with the eponymous storm from back in that day…
There’s supposed to be an increased chance of NE-affecting hurricanes this year, btw, I think…
cheers!
Yeah, plus global warming will put all the hot spots under water soon enough. Heh heh!
What happened to “Spring Selling Season” ?
I believe that our frequent poster Robert Cote is the one who coined the phrase “Silent Spring” as a replacement.
We’ve put a lot of sweat into it
These people are going to have to learn what a sunk cost is.
Speaking of going the other way - look at this gallup poll on housing market confidence:
http://poll.gallup.com/content/?ci=22609
I think that if this guy has not sold his house in 100 days, reduced a whopping 5k off of the original price, and still has some equity, he will soon find himself underwater in that house. A house that sits 100 days without an offer, is most likely going to sit more as the market keeps correcting, until he is no longer able to sell at a profit. This will happen in very short order, specially if they are unable to hang on, and need to move.
He is in denial, and he will chase the market to the grave. IDIOT.
Big F*****G Deal !!! The house has been on the market since January and they are reducing the price from $399,900 to $394,900??? You really want to sell the house? Try dropping the price another 100K !!!
he can’t afford to lower it anymore. It would put him in the negative..lol.
Welcome to HELOC hell.
‘We hope this does the trick’
Yep. A 1% price cut will bring plenty of offers. If not, wait another 100 days and cut the price another 1%.
No Kidding! These folks might as well have raised the price by 5K for all the good it is going to do them. These are the idiots that will be fun to track chasing the market down to a loss. What morons, you would think that between the two of them they could come up with a couple of brain cells that would give them some intuition in this matter.
Actually a 5K rise might be a better strategy than wuss cuts. Only idiots are buying now, so you might as well fish for idiots. A price rise might lure them in.
You are 100% right. At $405k, at least you enter a new price bracket. People who are starting their search at $400k now see your house, whereas before they didn’t know it even existed. It now becomes the most affordable house in the new price range. I wonder what genius thought that lowering by $5k would actually generate interest; the RE agent or the homeowner?
I’d put good and large money on the homeowner
“You really want to sell the house? Try dropping the price another 100K !!!”
Ya, but they don’t want to “‘give our house away,”
“Eric and Denise Kerble of Swampscott put their spacious Colonial on the market in January for $399,900″. Gee Eric, just what does SPACIOUS mean to you? Oh yes, I found it, a 1,586-square-foot house. I sold my 2260 sq. ft. house in 2004 and I called it adaquate for a family of four.
“The Kerbles are one of the many Massachusetts families living in limbo, trapped in a suddenly stagnant real estate market that has forced them to put their dreams on hold.” No, the stagnant RE market has not forced you to put your dreams on hold, it’s what you perceive you are entitled for compensation for your house that has put your dreams on hold.
““We don’t want to give our house away,’ said Susan McIntire, who hopes to find a house with more land in New Hampshire.” No Susan you just want someone to take a white elephant off your hands at an inflated price so you can now buy based on location, location, location. But just maybe some of those buyers you so badly need will be heading to NH before you so they can flip you a house further down the road.
With 1% price cuts by sellers, this is going to be a slow decline. I can see now how prices in Japan went down for 16 years . To get to 40% price buts, it may take us that long too. Where oh where is point of recognition, get out now!!
Simmssays…
http://www.inventorspot.com
‘The upward movement has definitely turned the other way. It’s a buyer’s market.’
I guess we will just have to keep pounding away at this fallacy until the mainstream media finally “gets it”, as every industry “expert” quoted in the press these days repeats the platitude that it is now a “buyer’s market.” Evidence shown in a 2005 CNN Money article (previously posted and discussed here) shows that it generally takes at least three years for a real estate correction to bottom out, and those San Diego (and other frothy market) buyers who jump in early are in for home equity losses on the order of maybe $50K/year for three years straight on a $500K property (the median-priced San Diego home). I guess if you are rich enough to tie up lots of net worth in an asset with three years of large negative returns, this is no big deal…
Ditto — we’re not even close to a true “buyer’s market” yet. At least, for the patient, it is fun watching it head that way.
Good call. And you and I both know that someone with a $500K property isn’t rich at all and certainly not rich enough to absorb 3-5 years of $50K+ losses/year. This “buyers market” crap is really starting to irritate me. This is a nothing market now that buyers have vanished and inventory is skyrocketing. Talk to me in 3 years when the San Diego median is $300K, there are tons of REO and foreclosures, and most people won’t touch RE with a 10 foot pole. Then it will truly be a buyer’s market.
But in Rhode Island things are still selling. The town I am interested in , there is very few good house in 400K range. If they come on market they sell quickly. I don’t know when or if the market will crack.
RI and SE mass, always trail Boston, and the north end. The reason for this, is when people tire of looking north, they go south. You are getting the stragglers from Boston, that can live close enough to the MBTA, and yet find affordable housing.
Wait, and nice places will come in line…
tracked a Needham, MA cape built in 1940 (259 Greendale Ave, Needham, MA). It was listed in 629k last spring and has non-stop price reductions till this spring to 539k. Just noticed it was closed for 520k with $5000 towards closing cost. Does this mean something? A totally screwed spring market. It could be a lot tougher for the coming summer season in Boston area.
Wow, I remember Needham’s rising prices when I still lived in NH. In 1984 it was considered one of the hottest places to buy in the area! And prices for the time were considered to be skyrocketing.
This article says:
The median house price dipped to $325,000, from $330,000 in March 2005.
I don’t get it. If 41K people have left per year, and the number of houses is the same or greater…then wouldn’t that in an of itself cause a surplus in housing stock? Why have prices doubled in 6 years while the population was falling? Are there an extra 100K houses in unsold inventory?
no one knows how they came up with those numbers of people leaving
NYC has been losing people for decades and yet there is no shortage of buyers willing to pony up 20% or more for a downpayment. it’s like the florida realtors saying how florida gets 3000 new people a day. for all you know they are investors buying up 5 homes a piece. 5 home sales is 20 people moving in since you count the kids and the wife
I thought NYC’s population was at record highs (the five boroughs, at least). As in, it had never officially been over 8 million until 2000, and now it’s pushing 8.2.
See, everyone *does* want to live there.
Yah, everyone fresh off the boat.. NYC is kept afloat by immigration (36% foreign born), and until they figure out the American system (that there these other states out there, with lower costs of living and taxation) they’ll be raising their families in the outer boroughs just like my own immigrant grandparents…
Think you are right about multiple buys by single buyers. In Florida, one couple I know own three other properties besides their own house. They are rich flippers so can withstand a downturn although property taxes and hurricane insurance etc going to cut into their profit when they actually sell.
Last year, nationally, 40% of sales last year were declared as “second homes”. Then there were all the folks whou bought a new primary residence and then decided not to sell the old one, whoch wouldn’t show up in the statistics. So most likely at least half of last year’s sales were not primary residences. That kind of renders the population stats irrelevant.
I have also been puzzled by this. Just anecdotally, I have noticed that a lot of my single friends have been buying houses over the last several years. So, even as total population falls, the number of households that want to buy stays steady or increases as household size gets smaller.
“If 41K people have left per year, and the number of houses is the same or greater…then wouldn’t that in an of itself cause a surplus in housing stock?”
I think some of that housing went to illegals which did not get counted. Friend w/high school daughter in Norwood said her daughter was the only one who spoke English as a primary language in her after school job.
Another thing to consider, how many coastal properties went from primary residences to vacation homes. Friend on Cape said many homes in her neighborhood were dark all winter! Didn’t used to be that way just a few years before.
Is it because outside “investors” or locals holding more than one property? May be that is part of it. Another factor is “psychology”. Every day no of shares bought and sold are equal, however price go up and down based on market sentiment. So in RE the sellers have been saying I am not giving it away, I want 50K more than the neighbour. And buyers were happy to jump in. My 2cents.
‘We don’t want to give our house away,’
You here this again and again. Homeowners who hold dearly to the belief that they are the bestowed beneficiaries of the extraordinary run up value of their houses, even though the meteoric rise was not based on any of the factors that normally drive the real estate market.
This attitude of entitlement will erode as their meager reductions meet with the continued indifference of buyers who have now smelled blood in the water and will continue to circle until the just the right moment.
Good night and farewell my sweet Spanish Lady.
A lot of the Mass homesellers are moving into Maine. A friend in Portland just sold his house after 10 months on the market to some people from Mass.
There’s a home in our development that went on the market three and a half weeks ago for $725,000 and they’ve had three showiings. And now another house right next to it is going on the market.
The $725 price is ludicrously high. It will be funny if the other house, which is newer and bigger, goes on for $625,000. The variation between home prices of comparable homes is pretty pronounced. Some sellers don’t get it. Others do.
And of course, this story did not do these sellers any favors letting people know what they paid. I’d be in no hurry to offer them a windfall even if I liked the place.
How big are these homes for 725 in Maine? Sounds like it must be a mansion.
The one that is already on is 3,645 sq ft on a lot of 63,000 sq ft. in a golf course community within a top ranked school district. It’s a very nice house, built in 1999. The present owners paid $520,000 exactly three years ago. So I don’t know why they think it’s appreciated by 40% in three years. As crazy as prices have gotten, I don’t think things have gone up by 40% in three years. Maybe in some places - but not here! If they’re lucky they’ll get $650-$675. If they’re not lucky, they’ll blow the opportunity to sell it in the Spring market and end up having to sell it for a lot less.
A funny thing happened the other day…I was riding behind a turnip truck. It took a sharp corner and the Kerbles fell off.
Too funny eco. Just had a wisdom tooth out and that was better than laughing gas.
(funny thing happened the other day…I was riding behind a turnip truck. It took a sharp corner and the Kerbles fell off. )
Clearly, the turnip truck then ran over their heads. That would explain their marketing strategy.
From public records.
The Kerbles bought their home in 1998 for $205,000. They financed $149,000. There were a series of refies over there years — 3 times in 2005. Last refi was in July of ‘03 for $140,000. Then in February of 2005 came the whopper — a $200,000 HELOC.
that’s what i call motivation…they don’t want to give it away and i’m sure they don’t want to pay higher interest…something’s gotta give, though. i don’t think $5K going to do much there.
If there is a HELOC of 200K agains this property it doesn’t mean that they actaully took the money out and spent it? Does it?
Craven, would you mind sharing where you get this data. Thanks a lot. Great posts.
I hope they like their SUV, TV and other toys that have put them in the poor house. 140,000 + 200,000 + 6% commission = nada (If they are lucky enough to sell now)
Should say.. 3 times in 2003. The 200k HELOC was in Feb of 05.
So they pretty much have zero equity. Well, zero equity would be the best case.
Last refi was in July of ‘03 for $140,000. Then in February of 2005 came the whopper — a $200,000 HELOC.
Im beginning to think Americans are the dumbest people on the planet.
Cravin’s research points out one of the main reason for the current surge in Inventory across America.
slooooooooo down. this home began with a $140,000 note, and now has an additional $200,000 note?
i can’t seem to find the words right now……help me
Yep , I feel the same way .
We need to ship them off with the phone sterilzers…
Sizable St. Louis homebuilder hits the skids-
http://stlouis.bizjournals.com/stlouis/stories/2006/05/01/story3.html
Good find!
Economist ? who pays these guys- he’s 6 months late
hel Bahstin was soft a year ago- started in cape/dorchester
same as 1988
Flat, can you post any Cape numbers, stories? Always asking but never see anything. Thanks
From what I read on this blog, it appears there is more than just a little bit of FROTH in selected markets.
Also, it appears that 50% of the U.S. population lives in the FROTH markets.
This gives me an idea. People should be able to buy overpriced houses and rely on the inevitable 20% annual gain for their retirement nest egg.
Call it a Froth IRA.
soon to be the late-night bad one-liners on letterman
OT, regarding US economy heating up and savings rate:
With income growth outpacing spending growth in March, Americans’ personal savings rate improved. The personal savings rate — savings as a percentage of after-tax income — rose to negative 0.3 percent in March, compared with negative 0.6 percent in February.
>”Economists, however, caution against reading too much
> into the savings rate. They say it doesn’t provide a complete
> picture of household’s finances because it doesn’t capture
> gains from such things as real estate or financial investments.
So economists now want to consider house price increases as a form of “savings”? What if the house is something you actually *live* in, and can’t access these ’savings’ (except by taking out a loan)? I don’t get it.
Anyways, the rest of the article is about the economy heating up…will the Fed still pause after the next round of rate hikes?
Construction, Consumer Spending Hit High
Construction Spending Reaches All-Time High in March; Consumer Spending Advances in Same Period
http://tinyurl.com/pytwj
It’s begun to hit home for us.
I just received a call from the fine folks who administer our company’s 401k. Our employees have not been making regular contributions to the fund. They either make none or the minumum. I can assume this is due to the fact that most have joined the biz in the last 2 years and have all jumped into the housing market and , knowing what they make, most really can’t afford their situations.
Bottom line is that with out their contributions the entire 401k is at risk. You can’t have a program into which only the top 5 or so make contributions.
We pay well. These folks are getting squeezed. Crazy.
There are a few ways around this. You might have to contribute to everyone who is eligible - this can be expensive- however, it would allow the Highly Compensated to make their contributions. Also, you could try a non-qualified plan. Ask your 401k admin. There are still a few holes left in the code.
We will be having an all hands meeting this week. There are options but none are as good as having these employees make their contributions. The HR dept. will be doing a nice PP presentation on Screwing Yourself By Ignoring 401K matching.
And then…I talk to one of the managers who tells me of two of her admin assts. who have EMPTIED their 401ks this year so they could get into homes.
So, when do they start asking for pay increases or loans?
Will we lose these pple?
Well back in ‘99 I borrowed ~35k against my 401k for my downpayment. Refinanced it and repaid it in ‘03. Its better to be lucky than good, and my timing was certainly lucky.
More scary news Coloradan. If you can’t drop 1% of your gross into a 401k, you had better get used to those yummy Alpo dinners you’ll be snacking on come age 65.
Better make that 10%, at least.
Better make it 25% if your over 50.
it’s funny, in late 05 the general consensus here was that things had slowed down in the fall. now we are in to the hot spring market and the superbowl kick-off was a huge dud. man, how times have changed. I bet the average person doesn’t know about how much inventory has increased, how much sales have plunged and just about any other nasty little RE bubble stat.
In March, home sales and prices dropped 1.5 percent, with the average selling price falling to $325,000 from $330,000 in March 2004, the Warren Group reported.
2004??? I sure hope this is a misprint (the original article does say this). If not, they are comparing to 2 years ago, not last year. Many have suspected they would do this. So the $1 Million question: was this a misprint in the article, or deliberate reworking of the stats to make the loss not look so good?
Regadless… It must be an error, because RE only goes up in value, and 325,000 seems less than 330,000 to me…
Clouseau
Dear Inspector:
I don’t believe this is a misprint. In the past 3-4 months, I have seen several comparisons to 2 years ago. The comparisons usually say “Prices [etc.] went up x% compared to 2004″. There is no doubt that the comparison to 2005 figures would be dismal. They will continue to manipulate the public this way as the YOY numbers deteriorate.
Some people just don’t get it. I bought my house in MA last December and the owner reduced from 469k to 449k and we went under agreement at 423k in 3 days. I did my own negotiating with her realtor. I felt it was a fair price. The seller was the original owner of the house built in 1970. At the time I’m sure she felt like I was low-balling, but given today’s market conditions, I am sure she is glad she took my offer. I have a conservative 30yr mortgage w/ 20% down and I plan on staying here forever.
This market cracks me up, seriously. I am so, so happy I am no longer in it. On the one hand we have sellers like this who think a 5k reduction is going to ‘close the deal’. (Good luck w/ that strategy.) On the other hand we have potential buyers who think the sky is falling and they are going to be able to buy a palace in Newton for chump change. (If the sky falls, you will no longer be in a position to buy because you probably won’t have a job.) Amazing, amazing, amazing.
My former neighbor in Danvers MA, not far from Swampscott took out a 285K HELOC in 2005 on the house he bought for 35K in 1990. He rebuilt the house himself. Its a weird little house, in any event. What could they have been thinking? He owes 8 times what he paid for it. The town assessed it for something like 325K. In today’s market, I doubt there would be a buyer because the house has so many issues. At best, I would guess he might get 275K. Wages are pretty stagnant in MA and with fuel prices so high, it won’t be long before we see the foreclosures up like they were in the early 90’s.
There is going to be a ripple effect, then a tidal wave, and my concern is that it takes down the economy. Its easy to laugh a people for being fools, but the fools are going to take the rest of us down with them.
The more people that stay in their house long term the better it will be for everybody .I say take in borders , get a second or third job, just don’t let the house go . It will drag a person down for years if they loose a house .
There is going to be a ripple effect.
You got that right!!
http://www.halfbakery.com/idea/Liquor_20for_20the_20Homeless
Ripple: Liquor for the Homeless
Folks, other than the people who’d grown up here, who else will be moving to Mass, in mass (pun intended), when most of our non-RE jobs have left our state for either offsource or cheaper American locations (Carolinas, midwest, etc).
And believe me, as more and more of my friends move out for better opportunities, in other states, it’ll take a lot more than the Red Sox or Celtics to keep one in this town. (Doc Rivers is a terrible coach, BTW).
I just read the Boston Globe article. It says Mr. Kerble is employed as a “financial analyst” at monster.com. One would hope he does a better job of handling his company’s finances, when compared to handling his personal finances. I can’t believe a finance guy can be so clueless about the market, with token 1% price reductions over several months.
Quick update on the house across the street from ours (western suburb of Boston). Originally listed FSBO late last year, asking $499. The owner informally told me last month that he would entertain any serious offers at $450. We saw an agent put up a sign on the front yard this weekend, so I suppose it’s no longer FSBO. Let’s see what it eventually goes for.
“‘We don’t want to give our house away,’ said Susan McIntire, who hopes to find a house with more land in New Hampshire.”
Did you MassHoles ever stop to think that the natives might not want you there?
with price adjustments of 1%, it going to be a slloooooooowwww decline.
simmsays…
http://www.americaninventorspot.com
A $200k HELOC? What the hell did they need to buy with $200k? Twin SUV’s and a plasma in every room? Idiots, they deserve to burn.
My friend just got back from Belize, where she met an English couple who are taking an entire year off work to travel the globe, and they’re financing it all with a HELOC. Welcome to a brave new world.
“What the hell did they need to buy with $200k?”
Depreciating junk… 2 Chevy SLOBurbans, a 20k vacation to mexico, a boat, 3 plasmas (all 3 are leaking)…..
I bet all that stuff made him happy…….. for about a week.
maybe they bot another property somewhere. you just can’t go out and spend 200g’s like that.
you just can’t. it’s so wrong
Comment by cereal
2006-05-01 11:07:12
maybe they bot another property somewhere. you just can’t go out and spend 200g’s like that.
you just can’t. it’s so wrong
___________________________________________________
You would think so but on the other hand, I know dozens of 80k/yr combined wage slave couples with a slapped together “home” and 2 Chevy SLOBurbans in the oversized garage. I’d sure love to see the look on their faces when filling up their behemoths.
Doesn’t anyone pay for vacations the old fashioned way, on one’s credit card?
In response to Rob:
> On the other hand we have potential buyers who think
> the sky is falling and they are going to be able to buy
> a palace in Newton for chump change.
The sky did nearly fall in the early 90’s right here, perhaps
you weren’t around to see it? During the last downturn,
marginal properties like condos in suburbs crashed 70%
or more. This time around it’s going to get even worse,
due to the incredible blow-off top that we just experienced.
I do expect desirable houses in Newton to sell for the
equivalent of “chump change”. I expect prices to eventually
drop 50% or more from today, and that’s for sensible properties
in decent Boston neighborhoods. At that point, only the folks that have no choice will sell - people forced to relocate for jobs,
distress sales from failed banks, etc. Volume will simply
dry up to the point where the going price is: whatever
liquidity the buyer can scrape up in a hurry.
> If the sky falls, you will no longer be in a position to buy because
> you probably won’t have a job.
And that is the time to buy - when it’s extremely difficult
for most other people to do it, the banks aren’t lending,
you have to jump through hoops to get a mortgage, etc.
That’s the whole point of keeping one’s powder dry right
now - i.e. big savings accounts and cash equivalents
(and in this climate of blatant currency debasement,
gold and silver too).
If indeed this housing stuff is as bad as everyone thinks, remember the Nasdaq lost about 80% of its value.
Well said.
Can we make the Kerbles our poster children on this board for this kind of seller, much like Suzanne (she did the research)?
from now on, Kerble can be a synonym for a HELOCed FB.
As in: “He’s a Kerble” or “He’s Kerbled for sure”
But “Gerbil” sounds much more accurate. lmao
This is not fair to the Kerbles. The registry shows a mortgage for a $200,000 HELOC, it does not indicate that they borrowed more than a small amount of their approved credit line.
emailed author on this 200k heloc missing from the story……she thanked me when emailing back…..i hope these folks get skinned….i’d offer 220k….that’s all it’s worth…too bad they most likely have much more debt than that…good move with the heloc…hope you didn’t spend it all….something tells me they did
lingus,
Last I checked, this was still a free country. If somebody has the money to buy property, they can buy one for that’s for sale. That’s how it works. It has nothing to do with what the natives want or where the buyers come from. Remember an ‘import’ buyer in NH, VT, or ME is most likely buying from a local. So maybe you should direct 50% of your negativity towards your fellow VT’ers selling out for the money. Think about it or is that beyond your back-country comprehension?!
Guess again dimwit.
Moonjour,
What makes you so sure you won’t be the one w/o a job or the one relocated? What do you expect interest rates to be at the bottom of this peak? How difficult do you anticipate it will be to qualify for a mortgage?
After one more unpleasant encounter with a crazed neighbor, I’m thinking of putting my Amesbury MA house on the market. I bought it for 285K in 2003, put on a new deck, roof, water heater and another heating zone. Being realistic, I am thinking of a list price of 305K. Its an newer house, with a large yard and lake view and access.
Given the probably future state of the economy, I’m trying to figure out where to go next. I’m thinking of a moderate climate (won’t freeze or roast to death if no central heat or ac), good growing conditions (for my own food), something I can pay cash for, and the possibility of reasonable employment. Does such a place exist in the US? I’m starting to think like a survivalist, but the possiblity of $100/barrel oil and bursting of the housing bubble is making me nervous…..
Rob, I work in high tech so I’ve never had any illusions of employment stability. This is why I find all debt extremely distasteful, mortgage debt included. We skimped and saved to pay off our small mortgage several years back. If MA becomes a total disaster area employment-wise, we just don’t have to care if the going price on the house is $1 or $1,000,000 - we just take what we can get and move.
I would rather that didn’t happen since I actually like living here, unlike many others apparently. But I do sleep well at night without having to worry about worst-case economic scenarios.
Re. your other questions. Again, I have no idea if the long bond is headed to 0% (deflationary spiral like Japan) or 20+ % (repeat of our 70’s/early 80’s) - or even if we’ll have both, in some sequence, as some have conjectured. I don’t think anyone can make bold predictions on these things and be correct every time. It won’t hurt to hedge one’s personal finances against each of these outcomes; and that’s what I’ve done. I’m confident about just one thing: the US stock market is headed for a wrenching time, the likes of which our generation has never seen (i.e. worse than 2000-2001). This feels like a serious opportunity to short stocks. Shorting doesn’t float my boat much - I don’t care for all those uptick rules and such, so I pass on this one. I like easy trades.
Were you in MA during the tail-end of the last real estate mess? 1991 to 1994 or so. I saw situations where someone desperately wanted to leave town and would take practically -any- offer. You apply for a mortgage in that climate and it’s going to take its own sweet time. It’s not a issue with qualifying - the banks were pre-occupied with their mountains of existing bad loans, gun-shy and basically didn’t care if they got your business or not. They would take weeks to get through your paperwork and respond to your calls. Think 180 degrees off the current ditech “closing in one week” or whatever that crazy business model is. That experience taught me the real meaning of “Cash is King”.
My point really is: it’s definitely possible to get a great price on good properties, and now is nowhere near the time to buy any. I would wait and look for clear signs that this gusher of liquidity that we’re still experiencing is truly gone. I surmise that’s several years away.
What about the mortgages that are supposed to be easier than ordering a pizza? Won’t that continue in the future?