Now Is An Amazing Time
I suggested the following topic and link. “How about a once and for all, HBB battle royale over used house salespeople? Are they as bad as some here say? Just some rotten apples; an industry too corrupt to be worth salvaging? Or a group of professionals that help people navigate a complex process? “Charlie Young, president and CEO of ERA Real Estate, was in Brevard County this past week. While here, he and Barbara Keller, owner of ERA Showcase on Merritt Island, met with FLORIDA TODAY to talk about the housing boom and bust, lessons learned and what’s next.”
“Q: The criticism I hear most often about Realtors is that they always seem to say, ‘Now is a great time to buy a home,’ no matter the circumstances. How do you respond to that?’ ‘Keller: I ask people to prove it. We should be able to stand behind any of our opinions and statements with facts that support that opinion. I think if all of us would start asking for that from people we are working with in any industry, it would uplift what’s happening.”
“Young: It is always the best time to buy a home when it’s right for you. You can’t time the market in real estate. The right time to put your home on the market or the right time to buy a home is when it is the right time for your personal needs. It happens to be a really affordable time to buy a home. That oftentimes gets translated into, ‘It’s a great time to buy.’ Historically, it is a very affordable time to buy, but if you don’t need a house today, I wouldn’t buy a house.”
One reader said, “They always give a reason why it’s always a good time to a house, even if that often turns out to be wrong. They had no shortage of reasons to buy a house in 05/06/07 when doing so was financial suicide. This purposeful disinformation (lying) wasn’t from just a few rogue agents, but was at the core of this industry. I don’t see how the relatively smaller number of good agents can purge this industry of most of the bad players.”
Another reply, “You can believe that the agents mostly knew better and were all lying for their commission, or you can believe, like I do, that they were caught up in the mania as well. It’s in their financial best interest to get people to believe.. but that doesn’t mean they don’t believe themselves.
Of course, if you ask a realtor to explain why they think it’s a good time to buy we all know exactly what you’ll hear.
“not making any more land”
“population growth”
“real estate always goes up (in the long term)” *cough*
“interest rates at all time lows”
“renting is throwing money away”
“you can paint the walls”
None of them will have done the financial research to back up their claims.”
One added, “You people have developed a culture of stupidity and doubletalk for yourselves that you just don’t know when to STFU. It’s time now. Keep your @$%ing clueless *OPINIONS* to yourselves for EVERYONES benefit. Your corrupt culture that YOU created has completely enveloped all of you and you’re to o#@$%ing blind, arrogant, self-entitled and greedy to see it.”
To which was said, “It’s great to see you have moved past the anger phase of the housing bubble stages of grief.”
The Press Register. “Fairhope rated as Alabama’s most expensive housing market in a new Coldwell Banker Real Estate national survey of 2,300 markets. That typical house in Fairhope was listed at $272,966, according to the survey. The least expensive market was Albertville in Marshall County, where the average list price was $114,900, according to the 2011 Home Listings Report.”
“‘We’re selling more houses under $200,000 than anything else,’ said Charles Hayes of Coldwell Banker Charles Hayes Real Estate in Mobile. ‘A lot of these are first-time buyers because they have nothing to sell and it’s a great time to buy.’”
The Union Leader. “Q: My wife and I have been renting for a long time while trying to save money to buy a home, but we’ve been reading something about 20 percent home mortgage down-payments becoming mandatory. What does this mean to people like us?”
“A: Once again our government is working its magic to rebuild a strong real estate market, and one potential change has a lot of professionals in the industry, especially Realtors, concerned. There is talk of a proposal to increase the minimum residential down payment requirement to 20 percent. That cannot have a positive effect on ‘The American Dream’ that is still trying to get back on its feet from major economic body blows.”
“How much more difficult will it become when a first-time buyer has to come up with 20 percent of the sales price? It will take the average person years (and years) to save up the minimum of what they will need. We could well be planting the seeds of an entire generation of renters who never quite manage to save enough to buy a place of their own or worse, be creating a market in which foreign investors and parties with purely commercial interests are the only ones able to afford a home — ‘The Global Dream?’ Clearly, a better course is to help make ‘The American Dream’ an attainable goal again, which not only benefits the home buyer, but our entire American economy.”
“For more information about buying or selling a home, visit www.gmnbr.org as your Realtor resource.”
The Lodi News Sentinel. “Ilyce Glink of CBSMoneyWatch.com wrote a recent article titled ‘5 New Rules of Real Estate,’ In the 20-odd years that she has been writing about real estate, there has never been a better time to buy a home.”
“There’s no reason you shouldn’t buy a home now and take advantage of super-low prices, historically low mortgage interest rates, and a significant supply of homes on the market. But to be successful in today’s real estate market, you need to understand that the game has changed. R.I.P. to the big pricing jumps of the past. If you want to buy a house, you have to have enough income to support the mortgage. Now that every borrower has to have a job and some sort of down payment, and the only basic loan types available are 30-year and 15-year fixed-rate mortgages, you won’t be able to leverage up with your mortgage, and housing prices should remain far more steady. In short — buy now, but don’t expect a huge pop in home prices. It isn’t going to happen.”
“Sure, there are amazing short sales and foreclosures out there. To find them, you’ll have to hire a great Realtor who really knows what he or she is doing and can help you navigate a tricky and frustrating negotiation cycle.”
“Somewhere along the way, ordinary civilians got the idea that there were massive profits to be made in real estate, if only they could flip the properties fast enough. The problem with that strategy became apparent when the real estate market crashed. But now is an amazing time to buy investment property. Purchase a foreclosure or two (or up to 10, if you can find the financing), and focus on how much income you can get each month.”
My Fox Tampa Bay. “Last month, prices reached their lowest level since the housing bubble burst in 2006. They’ve been driven down by foreclosures. U.S. home prices keep falling down, down, down. It’s driving many sellers underwater on their loan straight into foreclosure. However, that misfortune has a silver lining for buyers looking for a deal.”
“After years of renting, Travis Hubbard is ready to buy his first home, but not just any home. He’s one of many home buyers interested in foreclosed properties. ‘We get walk ins at the office every day. We get phone calls, ‘I want to see a foreclosure. I want to see a foreclosure,’ said Remax marketing specialist Sue Benson.”
“So the next time you see a foreclosure sign, you should know that it’s quite possibly a great deal and most definitely changing the prices in the housing market. ‘There’s also so much competition now with regular sellers because they have to compete with those foreclosures. So they have to lower their prices to come in to the game,’ Benson said.”
“Lower prices are a trend in the housing market right now. What’s great for buyers can lead sellers toward the financial catastrophe of foreclosure. Realtors advise you to not fear double-dip-recession headlines. Instead be creative in how you market your home. ‘Don’t take the double dip and go ‘Oh my gosh I can’t buy a house.’ I’m not going to sell right now. Use it as a positive thing,’ Benson said.”
The News & Observer. “Although Donna Roberts’ Cary house is for sale, she was not among the hundreds of Triangle homeowners who participated in a nationwide open house event over the weekend. Instead, she used the weekend to scope out the competition, touring homes in her Lochmere neighborhood that are priced similarly to her own.”
“Roberts’ house has been on the market since late March. Initially listed for $825,000, the house is now at $779,000 after two price reductions and just four showings. Fearing further discounts, the neighbors on her cul-de-sac are now upset at her for selling. ‘It’s tough now,’ Roberts said. ‘But housing prices could go down even further. There’s no good time to sell right now, unfortunately.’”
“‘It’s a great time to buy, but it’s a horrible time to sell,’ said Graham Smith. ‘You’re afraid of losing your shirt on your home.’”
“Smith, along with his wife and two daughters, was looking at homes for his sister, who is relocating to Raleigh from Pennsylvania. The Smiths, who own a home in North Raleigh, eventually want to move to a house with a larger yard. But they’ve watched nervously as the house next door has sat on the market since January drawing little interest. ‘We’ll ride it out for a while,’ he said. ‘We’re scared.’”
“Now that their four children are out of the house, Bill and Karen King of Cary want to downsize to a townhouse that will require less maintenance. They held an open house Saturday for the house in Lochmere that they’ve owned for 16 years. One person dropped by.’
“Since listing the house May 2, the Kings have cut the price from $440,000 to $429,000. The couple have a price below which they won’t go, but they’re also realists, Bill King said.”
“Hugh and Laurie Guy are among those homeowners who have seen both sides of today’s market. At the end of the month, the Guys are expected to close the sale of their house in Fuquay-Varina and the purchase a new home in Cary’s Lochmere neighborhood. The Guys will lose money on theFuquay-Varina house, which they bought 15 months ago. But they’re also getting the Cary house, which is 600 square feet larger, for a discount. ‘It’s such a buyer’s market,’ Hugh Guy said.”
“Roberts’ house has been on the market since late March. Initially listed for $825,000, the house is now at $779,000 after two price reductions and just four showings. Fearing further discounts, the neighbors on her cul-de-sac are now upset at her for selling. ‘It’s tough now,’ Roberts said. ‘But housing prices could go down even further. There’s no good time to sell right now, unfortunately.’”
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My in laws bought a house in 2005 in a newly developed swanky neighborhood. Why, I’m not sure since there house (1.5 miles down the street) was a really nice house. They bought for 335K.
After the bubble you’d drive down their street and see one in every six or seven houses with a “For Sale” sign. Property didn’t move much since it is at the higher end of the spectrum for the area. One house made it all the way to auction and sold….for $82,000.
The next week I was at their house and heard my MIL and FIL and a few neighbors complaining ALL DAY about it. “I cant BELIEVE they’d do that to us! That hurts us so much! Now the price per square foot is SO MUCH LOWER”. They took it very personal.
I personally would have words with my neighbors if they thought I was gonna name my selling price and stick with it. If I’m selling my house I want to SELL IT, not let it sit on the market for months and months.
I personally would have words with my neighbors if they thought I was gonna name my selling price and stick with it. If I’m selling my house I want to SELL IT, not let it sit on the market for months and months.
Here’s another fun factoid: Once your house is sold and you’ve moved on, those people won’t be your neighbors. You’ll probably never see them or hear from them again.
You mean you’re not willing to put your life on hold to support your neighbors’ property values? That’s not very sporting of you.
We have some Seattle neighbors who bought their retirement home in our little town, but then medical problems hit. They used to visit every weekend during the summer months, but this year we have rarely seen them. Their lawn was almost knee deep, and combined with the perpetual porch light the place started attracting attention. I decided to cut their lawn and “weed-eater” the edges. The guy next to their place called them regarding my efforts, and he told me that their son in law here in town was supposed to be doing the yard work, and he has been receiving money to do it. Gotcha!
I’ve told this story before, but when I sold my place in 2007 we initially listed it at the price my realtor thought was best. That was a good 20% higher than I thought we could get for it. After a month with little interest we lowered the price to where I wanted it.
I actually had neighbors calling my realtor to complain about the lower price and how it wasn’t fair to them because they had paid more for their properties in 2005-2006. Strangely, even though they thought it was such a super bargain they wouldn’t offer up the money to buy it themselves. The place sold less than 2 weeks later.
We had the very same experience in 2007 when we sold my mom’s house after she passed away. Her area was really hard-hit by the credit market seizing up in 2007, but the news hadn’t really hit the masses, yet.
I wanted to get out in front of the downturn and severely undercut everyone else in the neighborhood, and priced it $50K under the house across the street that was in escrow at the time. A few of the neighbors complained that I was lowering their property values, and were clearly upset with what I was doing.
The new buyers across the street (who were in escrow when we sold) ended up being foreclosed on just a year later, and nothing else has sold in that neighborhood for what we sold my mom’s house for.
Needless to say, we’d still be sitting there with a for sale sign in the yard if we had listened to what the neighbors wanted us to do.
“never ask a barber if you need a haircut”.
It’s really that simple…expecting any salesperson to be completely and totally honest with respect to the product they are selling is very wishful thinking.
expecting any salesperson to be completely and totally honest with respect to the product they are selling is very wishful thinking ??
Not if you have a superior product…
Even if you have a superior product, there is no unbiased opinion where a salesperson expects or worse yet NEEDS a commission.
No one is more biased than the salesperson who “thinks” their product is superior…been in a Mac store lately?
I must admit…superiority is a decision that I make as the consumer. The fact that the salesperson thinks so is irrelevant.
Looking at the parabolic stock chart and Steve Jobs’ fragile health, Apple seems an ideal candidate to short. But every time I go into the Apple store at the mall it is absolutely packed.
“Realtors are selling a fraction of the homes they once were, taking a huge hit in income. … And homeowners are desperate for the housing market to rebound — especially the more than 25 percent who are underwater with their homes — so they can refinance or sell their homes and move on with their lives.”
If I only had a dollar, for ev’ry song I’ve sung.
And ev’ry time I’ve had to play
While people sat there drunk.
You know, I’d catch the next train back to where I live.
Oh ! Lord, I’m stuck in Lodi again.
I doubt many of them will live long enough to see the value of their homes bounce back.
To me the “not making any more land” was the biggest LIE of them all.
They made tons of land in FloorRiddah by chopping down the orange groves…..or clear cutting 100 year old trees.
Not to mention that all the dirt dug out for the WTC helped make Battery park city.
Oh what about Dubai…and those islands?
The back bay of Boston is on created land. As is the Embarcadero in San Fran. Some of the Netherlands is on created land.
Aren’t most of those Dubai islands now underwater both literally and figuratively? Last I heard the only one still livable was owned by the Sultan.
I’d say it’s the most truthfull thing the re-used-sales-types say. Very little land has been made, and maybe some land has sunk into the ocean to offset. However, the availability of land to be made into residential isn’t affected in any relevant way by the total amount of land on the face of the earth.
“Charlie Young, president and CEO of ERA Real Estate, was in Brevard County this past week.”
Bawn and bred in Brevard County…
“You can’t time the market in real estate.”
Uh huh…
“The right time to put your home on the market or the right time to buy a home is when it is the right time for your personal needs.”
So you can time the market then, at least as regards the right time to buy a home for your personal needs?
My personal need is to not lose hundreds of thousands of dollars by purchasing a home when prices are falling at a record pace. That’s how I time the market — by not buying during an epic real estate bust.
Can’t time it? I’m not sure it’s even correct, housing prices turn much more slowly than stocks. Where’s my flashcrash!
No kidding. Home prices have been sliding for month after month after month, and once they stop declining, they are likely to stay in the basement for a long time.
Doesn’t such gradual and persistent change suggest the potential to time it?
They should have asked Barb Keller about her company’s several hundred dollar “regulatory compliance fee” (Latin for garbage fee) which used to (and maybe still does) show up on closing statements. It’s a pure profit item not required by any regulation other than management’s. Let’s also not forget that NAR spent $30 million dollars in 2006 on their infamous “Time to Buy” campaign. Anyone who took their advice then lost their shirt.
“But now is an amazing time to buy investment property. Purchase foreclosure or two (or up to 10, if you can find the financing), and focus on how much income you can get each month.”
The mania lives! How long from now until when people like this guy will be too embarrassed to suggest that buying real estate for investment purposes is a way to get rich quick?
Even in the markets which have seen the biggest corrections, it’s hard to find anything that cash flows. Yawn.
NAYSAYER! I’m running out right now to buy as many properties as the bank will approve. Or maybe I’ll just open another cold one. Which might be cheaper?
Here is a very odd bit of Used Home Salesperson logic: The coming reduction in the conforming loan limit for high-priced California markets is likely to cause home prices to decline. So hurry up and buy now, while prices remain high, rather than wait for them to drop later this year.
Why not wait until home prices drop to reflect the reduction in cross subsidy from Midwestern America’s Main Street taxpayers to San Francisco home buyers, rather than catch a falling knife?
Upcoming Drop in Loan Limit Could Adversely Affect Bay Area Borrowers
Friday, June 10, 2011
Fannie Mae and Freddie Mac, the private mortgage lending entities under government conservatorship, are set to reduce their maximum conforming loan limit from the current $729,750 to $625,500 on October 1st. Bay Area mortgage broker Eric Leithliter of California Mortgage Advisors says this may adversely affect the Bay Area real estate market, making it harder for homebuyers to get loans and lowering home values. He recommends that people who have been waiting to buy act soon, before the loan ceiling is lowered.
…
Makes perfect sense to me. If you wait too long you will have to pay a lower price and get a smaller loan which in turn means a smaller commission and I would guess a bigger commission now is better than a smaller one maybe later.
If you knew prices were likely to drop to reflect a huge reduction in the conforming loan limit, wouldn’t it make sense to postpone your home purchase, rather than accelerating it and overpaying on the purchase price, especially when falling home prices are underway and expected to continue for at least two more years (according to the Used Home Seller who wrote the article posted below)?
I am totally lost on what the Used Home Sellers are talking about regarding the coming reduction in the conforming loan limit, unless they are just trying to encourage prospective home buyers to catch themselves falling knives.
On the other hand, if I were a prospective seller of a home in the $625,000+ price range, I would be sweating bullets at the moment trying to get the home sold before the conforming loan limit is lowered. There may be no way to time the market, but that wouldn’t stop me from trying.
No way to time market
By DIAN HYMER
Posted: Jun. 4, 2011 | 2:01 a.m.
The decision of whether to buy or sell a home is perplexing. A lot of buyers and sellers are still wondering if now is a good time to buy or sell, or sell and buy. That is, sell a home that no longer works well, and buy one that does.
Ideally, buyers would like to know that the market has hit bottom and that the value of what they buy won’t decline. Sellers, who will sell at a loss today, wonder if they should get out now or wait for a better market to sell.
When will that better market appear? It’s impossible to time the market. We’ll know that we hit bottom after the market turns around, not before. Some economists think this will take another two years; others expect a turnaround in five to six years.
Many economists think we’re at or close to bottom. However, it’s expected that the market will be rocky for some time. The market will change seasonally. For example, it’s typical for home sales to decline during the winter months.
House Hunting Tip: Good and bad news can affect whether buyers feel optimistic about homebuying. The fact that the conforming jumbo loan limit is likely to drop to $625,000 from $729,750 could spur home sales in higher-priced markets between now and September when the higher loan limit expires.
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I’m a house seller and buyer. Got a posting message from the military so I have to move. Sold in an expensive market and bought in a cheaper one. After having been around Ben’s blog for a few years, you can bet I ran the numbers as well as I could.
Net result? I’m expecting to lose money on my recent buy, but it won’t be significantly different from the money I’d lose renting in a tight rental market. Sometimes the best option sucks. I’m also anticipating losing on my investments, and I’m diversified. The only battle I see myself winning against the PTB is my 0 cost commute by bike.
“We could well be planting the seeds of an entire generation of renters who never quite manage to save enough to buy a place of their own or worse, be creating a market in which foreign investors and parties with purely commercial interests are the only ones able to afford a home — ‘The Global Dream?’”
I’m happy letting the all-cash foreign investors lose their shirts in the final death throes of the bubble; American needs their money, anyway.
As regards the choice of whether to save up for a downpayment to purchase a home or expend your money on other consumption, this is up to each individual household, not an unholy coalition of the NAR and U.S. federal government housing policy makers.
It’s amazing to me that he thinks an entire generation of buyers will be removed from the market and prices will remain anywhere near where they are now. Maybe we’ll all be living in Pottervilles.
If that movie was remade today, Potter would be the hero.
“Now is an amazing time…”
Those five words have a lot of meaning. High paying jobs keep getting outsourced while RE cheerleaders do their monkey chants trying to dig up greater fools. They are like the special pigs in France bred to locate truffles! LOL!
The time to buy a house is when you find your dream house in a dream location priced within your budget and a cash purchase. Also the leftover assets you have still leave you financially independent.
“a realtor’s monkey chants”.
A new expressions added to the Great Housing Fraud lexicon.
“Now is an amazing time…”
Alright! Now must be the time to buy then!!
“You can’t time the market in real estate.”
Awe, shucks. How can I possibly take advantage of this amazing time if you can’t time the market?
+1. Nice catch, PB!
Yeah, rates are low, prices are falling… it’s a “great time to buy” until you ponder what will happen to prices if rates go to the historical norm.
It is always the right time to buy, if, you are buying a home, and you can afford it, and have the financial future to pay for it!
It is just like buying a damn car. You can buy Rolls, or Fiat, and you have bought a car, that you don’t expect to make any money on when you re-sell, you know it will cost you money to maintain it, but , by golly, you need that car!
Do you worry about losing money when you buy a car?
Why should you worry about losing money when you buy a house?
They are both purchased for usage, not investment!
“Why should you worry about losing money when you buy a house?”
You’re an idiot.
Do you ever get concerned that your pattern of mean spirited ad hominem rebuttals undermines your credibility?
Not at all.
That’s the response I expected.
Then don’t ask.
House prices may go up, they may go down. My bet if you buy in the next 5 years down, but regardless we all need a place to live, and frankly owning a home is nice if you can afford it. Any time a home is purchased you have to be prepared for a reduction in value. If you cannot survive that reduction or feel it may limit your mobility should you need to look for new work later don’t buy!
nope, I have a 154 IQ and know what I know
An idiot has an IQ of 50 or less, so I guess I don’t meet that standard.
But, you buy a car as an investment do you? How much did you make when you sold it?
I sold a 300 SL for $3,850 and that was all it was worth at that time. I suppose if I had held it I would have made a $100,000 dollars, but it was not an investment when I bought it.
My first three houses I sold at a loss, and I never thought they were investments, just homes.
I have been in this house for 45 years and it has gone up and down in price and it doesn’t affect me in the lightest.
Ok…. the next time you need to replace a car, select your model and seek out the highest price possible and pay it.
“My first three houses I sold at a loss, and I never thought they were investments, just homes.”
Maybe you should have rented for the first three houses before you bought and held your fourth house for 45 years.
Does replacement cost factor into where the bottom lies?
I think it would matter in a normal market; but with the glut of empty houses that means that replacement value is not a viable parameter to determine a bottoming of prices because of so many homes that have been “pre-replaced” already. Builder could say it cost 200k to construct a home; yet just because he has x amount into it does not mean he will get x out of it.
Factoring in replacement cost is not relative given the glut of inventory. It will come into relevance again when the glut of pigs has passed thru the python.
I think that 3x median income would be a better indicator of the “bottom”, so 100k for a decent house seems fair enough, as we make 30k-40k per year. Will only cost us 800/month to pay for PITI and maintainance; which is less than it would rent for. Rent would be about $900.
But the market is so screwy and disfunctional, it is hard to filter thru the dishonest brokers, the bank which will not respond to pre-qualified offers in a timely matter. Stretching out the time line to buy a home from a couple months to 6+ months or longer is the result of these “professionals”
Also confusing in price discovery; townhomes in our neighborhood are carbon copies of one another and their list prices range from 150k to 400k.
And most all short sales immediately get offers on them; which the bank typically ignores, as the price is fake; conjured up by a realtor. So a full price offer is not usually enough $$ since the Realtor set the price lower than the bank will take. Why not let the bank set the price and get this short sale BS behind us and allow a modicum of fairness back to the market.
“Home for sale! Home for sale! $1.00″. Sure gets offers, full price offers at that, but the bank will not take it. That’s what I mean by dysfunctional. Agents having no idea what the bank’s gonna accept; so they shoot under it. Agents not knowing(or even attempting to know) what $$ bank will accept; short sales are messing up the clearing of inventory that needs to take place lest they bulldoze en masse.
My parents put an offer on a short sale. They will use me as a property manager or let us live there and take care of the mortgage. (can we do it? Well, it is less $$ than renting)
Seller owes 200k, home offered at 115k; parents offered 109k based on a foreclosure behind that sold for 91k(foreclosure discount noted) and one accross the street that is slightly bigger that also closed recently at 125k. So right in the middle. I expect the bank to ignore this offer completely; it expires in 10 days. Then back to looking. But maybe the bank will sense that the best deal for everyone is to jump on the offer; the next offer will be lower, not higher. Or no offer at all due to being ignored by the bank the first time.
Yup. All that.
For me, I am getting really tired of negotiating with my realtor. He obviously wants me to spend $200k. I really wish I hadn’t started this whole process with a colleague.
He’s a great guy, but he’s not a good Realtor for an HBB type.
It’s time to fire him, Muggy.
Replacement cost may never be the bottom, as replacement cost will exceed the ability of the majority of Americans from being able to afford a new home.
When the raising prices of building supplies, land, and loans exceed the possible rise of medium level incomes over the same period of time. Then the ability of developers to build homes for that group of buyers, unless the buyers accept smaller, lower quality homes. Especially when the interest rates go up to the more normal 6% or so.
The wealthy are never affected by costs of homes, but the supply of wealthy buyers is limited.
And considering material prices are down since 2005 and labor costs have been declining steadily since the mid 1990’s, hows that work into your inflationary housing environment?
Short term, cost of goods (COGs) is irrelevant. It’s what the buyer can afford that is relevant. Currently the buyer can’t afford much. If buyers can’t afford to feed the suppliers, then suppliers should quit supplying.
However, if suppliers aren’t adding new supply, then prices will eventually rise as demand eats the inventory. Once prices have increased enough to cover the costs of production, suppliers will start producing.
What does that mean for the current market? Not much. Everything is so f’ed up from government meddling and price-fixed-low-interest-rate-speculation that sound economic theory (and it does exist) doesn’t mean much.
They had no shortage of reasons to buy a house in 05/06/07 when doing so was financial suicide. This purposeful disinformation (lying) wasn’t from just a few rogue agents, but was at the core of this industry.
The authors of the book “Freakonomics” called realtors “an industry of dissemblers.” A tiny minority of them might have some shred of personal and professional integrity, but as a group, they are beneath contempt.
In the big scheme of sales people we detest (IMO)
In order sorted by nastiness :
Used mattress sales people
Real estate sales people
New mattress sales people
Furniture sales people
door to door sales people
used car sales people
new car sales people
Check out the criminal history of some of them. We have one in our local area who is convicted of fraud. Almost every company she has ever worked for she was fired for missing money, but now she is a realtor. One of the places a convicted felon can always find a job.
Aren’t all realtors a fraud?
Replacement costs
I was trying to deveiop 160 acre subdivision with 450 houses.
We estimated that we could make a $1,000 a home if we could build them for $9,000, and the contractor said he could do that, but, our money supply dried up when the money man died.
1,050 3br 1b stucco , hardwood floors, wood shingle were selling of $10,500 new in the town.
One of the problems, in California, now is that you could not sell those homes as everyone wanted bigger in better.
Strange thing though, some of the old houses in Concord are still selling for $300,000 having dropped from $550,000
I guess it is the old,location,location,location.
around here homes are built one at a time, not in tracts.
replacement costs have new construction coming to a stand still.
its not the cost of materials or the cost of labor.
it is the cost of land and now the cost of compliance with new 2011 code.
lots are not selling and the prices are very slow to decline.
Here’s the basic problem I have with UHS’s who purport to represent the buyer: Their interests are not aligned with the buyer’s. It is in the buyer’s interest to have as low a house price as possible. It is in the buyer’s agent’s interest to have the highest price possible, as he is paid a percentage of the cost. Both are interested in having the buyer purchase a house.
That most basic dichotomy has bothered me for years.
The solution? Only have seller’s agents. If you have a house you like, tell the realtor your offer, just like you would at a car dealership. If you want assistance doing all the due diligence - title search, inspection, etc (?) - pay someone a set fee to handle all that stuff. Get the so-called buyers agent out of it.
OH - and also - put the entire listing for a particular area on the web.
“Here’s the basic problem I have with UHS’s who purport to represent the buyer: Their interests are not aligned with the buyer’s.”
Yes and no. UHS want a sale to get a commission. A higher price will get more for the UHS, but delaying a sale for a higher price isn’t worth it for them. If you’re dealing with a UHS, I’d be more wary of the push to by quickly than with the push to buy high. Either way, don’t trust them.
I’m sure not all RE agents are liars. Problem is that the liars are attracted to the industry and float to the top. Industry needs to cleanse itself, but won’t. The most basic lie is that residential real estate is a good investment. It is not, never was, and never will be. The average US house price increase (5.6% FHA all Transactions Index, 75Q1-11Q1) has not exceed inflation (4.2% CPI) enough to pay for maintenance (2% my guess) and opportunity cost (4.6% 10y Treas ex tax) over the past 30 years. Available data for individual markets around the world show this to have been the case wherever this data is available (eg NYCity/Amsterdam). At least check your own local market before you buy. Fact is houses are depreciating assets and replacement costs cannot trend higher than general inflation.
Moreover the market not perfect. Houses greatly differ in kind and location and are subject to large swings over time. Nobody, but nobody, can really time these swings or predict changing lavational advantages over the 20 or so years you might own a home. Some just get very lucky while others loose big. The winners boast loudly, while the losers slink away. And most people lose sight of the fact that low rates of return over many years give big dollar magnitudes, but a price that doubles over 15 years or so is just keeping up with inflation.
What can you do? Buy or rent, whichever is cheaper for you AFTER you have figured all your costs and income carefully AND considered the likely future changes in these relative costs. It would be nice if your real estate agent could help you put these costs in order, at least for the housing parts of the equation. But don’t expect much more. It would be even nicer if he/she did not repeat bald-faced lies. We can’t really expect that to change, but we can steer clear of realtors who mouth such silly clichés.
Will