‘People Don’t Want To Believe Housing Bonanza Is Ending’
Dataquick has some more Bay Area numbers out. “Home sales in the Bay Area continued to slow as price increases dipped into the single digits for the first time in more than two years. A total of 9,745 new and resale houses and condos were sold in the nine-county region last month. That was down 13.8 percent from 11,310 for March last year, according to DataQuick. The year-over-year decline was the twelfth in a row.”
“The median price paid for a Bay Area home was $622,000 last month. The median peaked at $625,000 last November.”
“Livermore realtor Mike Perry brings a book to read at his open houses now that the traffic of potential buyers has slowed considerably from the red-hot days of the housing boom. Call it one of the hidden signs of the slowing real estate market, which last month saw the lowest level of Bay Area home sales in five years.”
“‘Open houses have been pretty quiet,’ said Perry. Nowadays, from five to seven potential buyers will visit a typical open house, compared with 15 to 20 in early 2005, Perry said. ‘I’ve seen them as low as one neighbor coming in,’ Perry said.”
“‘What’s really crippling us right now is inventory. Last year, we were in the 140 to 150 range in the Livermore area and now we are almost sitting on 400 (homes for sale). There is a lot more on the market. The ones that are selling are the ones in prime locations or have aggressive pricing.’ he said.”
“‘Appreciation has been flat for six months,’ said Chris Thornberg, senior economist with the UCLA Anderson Forecast. Thornberg said the steep drop in year-over-year sales volume is not surprising. ‘This is how a real estate bubble pops. It’s not a price pop. It’s a volume pop.’”
“Inventory is up in the San Leandro area, from about 40 homes on the market a year ago to about 150 now, (realtor) Kristle Rittenbach said. ‘Homes are sitting a little bit longer. Buyers are just taking their time deciding. The buyers know they don’t have to rush anymore,’ she said.”
“Mark Jackman of a company that funds real estate projects among other things, said the region is in a ‘cooling-off stage.’ ‘Right now, we view the Bay Area as an area of concern,’ said Jackman. He cited two factors that could drag values into negative territory: the area’s substantial residential development and rising gas prices, which may make buyers less willing to move to outlying areas that entail long commutes.”
“‘It’s not that the sky is falling,’ LePage said, ‘it’s just that the sky looks a lot different than it did a year ago.’”
“It could be people don’t want to believe the housing bonanza ending. Tom Davidoff, UC Berkeley: ‘It takes a while for people to figure out interest rates are higher than they have been for the last few years and when interest rates go up, housing affordability goes down, and that means prices have to go down too.’”
‘He cited two factors that could drag values into negative territory: the area’s substantial residential development and rising gas prices’
So overbuilding could cause BA prices to fall? I guess they aren’t out of land after all.
Many myths will be destroyed with this bubble, only to resurface in the next bubble. Baby boomers, foreigners, prices only go up, get in now or be priced out, no more land…
I don’t know. As they say “Twice burned”.
Those who cannot remember the past are condemned to repeat it.
— George Santayana
Those who cannot remember the past are condemned to be unable to profit from it.
— feepness
I wish our economics were as rational as that.
Try telling that to those folks running up the commodity bubble. They’ll cite tons of reasons why gold will eclipse $2,000 sooner than later - terrorism, the bursting housing bubble, the credit bubble, etc.
Lol! Bubbles are the norm not the exception. I’m all for a run up in the commodities in that it should completely blow out this joke of a monetary system for good. Cash and carry baby!
Scott, You have a fundamental misunderstanding of gold. It is not a commodity, it is money. It has been for thousands of years. It was deemed money by society, not some government. Society will determine when gold is not money anymore, not some government. Until then, it stores wealth even though it just sits in a pile somewhere doing nothing and earning no interest. It has for centuries so why is it “different this time”? Because the banking cartel says so? The Federal Reserve note or Canadian dollar (or whatever currency you carry) was born from gold. The FRN was backed by gold internationally right up until 1971 when the U.S. defaulted on it’s debt (refused to pay out anymore gold like it promised too) and took the world off the gold standard. Why, if gold is just some commodity, would they still hold gold in their vaults? Why not copper or aluminum?
Do you realize that there are billions of folks around the world (not here in the U.S. of course) that consider gold to be money and the ultimate store of value? Check the populations of China or India and their opinion of gold, how about how gold is viewed by the muslim faith?
Just about every currency has entered a period of competitive devaluation (floating against each other and being printed to offset any strengthening) to the tune of at least 8%/yr.
There are probably a dozen fundamental reasons why you should consider buying physical gold to hold instead of paper money in your bank account. To explain them would take too long for this forum and I doubt it would persuade you since you seem to be predisposed to dismiss 5,000 years of history vs. the past 35 of an attempted “bait and switch” tactic.
I know where the dollar is going eventually, albeit not in a straight line just like gold won’t go up in a straight line. I know that other nations want to support the dollar for the time being and are printing their currencys just as fast as the U.S. Some day the bond market will figure that out and tank as well. So, you tell me what to hold to retain the purchasing power of TODAYS dollar if not gold and be sure to include some historical references on why?
Auger- save your energy. Gold is money- and although the 300M North Americans may at the moment not remember/realize that fact- it is not your nor my job to teach/convince them otherwise……One of the pleasures of being a goldbug is this principle…..sort of like knowing about a good restaurant or secret secluded beach….Someday you might wish for a return to the days when the sheeple viewed gold as a “commodity”….(so you could have continued to stock up)
Exactly. Hopefully we figure that out as a nation before the rest. Someone posted at one point a list of nations and their gold reserves implying that ours is somehow backed by gold. They stated the US reserves were around 8,000 tons. Our deficit ceiling of around 9 1/2 trillion versus that amount of gold would work out to around $30,000. That is just the deficit. Good thing it’s backed by gold instead of faith, or we’d be basing our financial well-being on bankers and politicians. Phew!
auger-inn, consider what you’re doing a public service and keep posting! *Someone* needs to make up for a failed educational system.. or at least try.
If you truly do believe that the dollar will be inflated away then the most profitable choice would be to go out and buy real estate on margin! Afterall, if the government is going to get such a great deal on the wasting away of the dollar then why not just go out and leverage yourself too? Take out a home equity loan and buy gold!
I think that the gold bug arguement is not relevent yet. The government has to continue to sell debt. That means that they need people and institutions to purchase it. To do that, they must support the dollar or face their complete demise. IMO, we are not even close to this end game.
I think that we are at the beginning of a great credit deflation (caused by the collapsing housing market). The money supply will shrink, causing the value of the dollar to rise. This is bearish for commodities, stocks and RE. It is bullish for cash and high quality bonds.
Perhaps the hyper-inflation choice will be made and gold will rise to $30,000 an ounce. But I think we are several years from that trump card having to be played. It is an act of complete desperation…
Gold is money… reminds me of the advertising campaigns to educate the folks about the history, allure and mystique of Gold… of course, after the Gold market had tanked, and they were trying ot get people into the mindset of saving in gold.
The best spoof of the was National Lampoon’s “glory that is Asphalt” campaign…
I plan to buy as much Real Estate on margin as I can.
In 2010.
but three times is the charm!
Gold is money, and of a kind which is typically prone to inflation and deflation far more dramatic than the paper kind. For instance, gold “inflated” to the tune of 10% in the past ten days. You can have your inflatable yellow metal money — I will stick with the green paper kind as long as our govt is in the business of trying to maintain the $US as the world’s reserve currency.
http://tinyurl.com/kfsy6
I must say this is a fascinating debate to listen to, really. thanks for continuing to post on this everyone…
I tend to agree with GetStucco’s and deflationguy’s perspective here, but I’m enjoying getting at least a little educated on this..
GS,
Betting against gold and Peak Oil? Well, at least we agree on a housing bubble.
“‘Appreciation has been flat for six months,’ said Chris Thornberg, senior economist with the UCLA Anderson Forecast. Thornberg said the steep drop in year-over-year sales volume is not surprising. ‘This is how a real estate bubble pops. It’s not a price pop. It’s a volume pop.’”
But after the volume pop….comes the price pop. High volume puts too much pressure on prices foe there not to be a price decline…and hopefully a significant one.
Agreed, the best way to determine a stock’s near term trajectory is with the NBV. Volume speaks volumes.
Volume pop => price slide. The latter will take six years or more to bottom out, because RE prices are very sticky on the way down.
“It could be people don’t want to believe the housing bonanza ending. Tom Davidoff, UC Berkeley: ‘It takes a while for people to figure out interest rates are higher than they have been for the last few years and when interest rates go up, housing affordability goes down, and that means prices have to go down too.’”
Most people in california cannot afford the average home even with low interest rates. Prices will come down because people are accepting just how absurd this Boom was. The Bust has been declared and everyone has a good idea where we are headed.
90 % of our population does no thinking of their own, they believe what they hear either from friends and family or the media. The air is pretty negative at this point.
Right. ‘It takes a while for people to figure out interest rates are higher than they have been for the last few years and when interest rates go up, housing affordability goes down, and that means prices have to go down too.’
The eventual outcome that no one can predict with any degree of certainty will be the degree of the downdraft that gets created with price declines. That feeds on itself to further declines, job losses in the RE sector and so on. Could be a complete unraveling? 40% sound like a lot but I don’t know what could stop it once it gets going.
Good point. One thing that is sort of interesting/scary is the inventory levels. Here in Sac, last time we had inventory levels like this was 1993-4, middle of the last downturn. If we are now at an all-time high inventory level (and AZ is extraordinarily high as well as many other areas) and the bust hasn’t even really gained steam yet, what kind of a shakeout are we looking at here?!? I believe a complete unraveling is in order and I don’t think there’s anything that can stop it. 60% haircut minimum. The Fed can’t slash rates to save housing as the dollar will die, and the dollar is more important. Of course, the dollar may die anyway, but that’s another discussion…
“If we are now at an all-time high inventory level (and AZ is extraordinarily high as well as many other areas) and the bust hasn’t even really gained steam yet, what kind of a shakeout are we looking at here?!?”
Darth — I think you have nailed what may be the clearest real-time indicator of how bad things will get this go-round. We are already at a comparable inventory glut to the point in the last cycle when the economy was in the final stage of a severe downturn (esp. CA) and the idea that “RE is a terrible investment” was common knowledge, widely reported in the news media.
Fast forward to 2006, when most folks just heard the news about the “housing slowdown” for the first time last week — out of the mouths of no less than the current and former Fed chairmen! It is hard to picture how bad the situation will get by the time that everyone learns that “slowdown” is a very euphemistic understatement.
Someone I know just refinanced into a 15 year interest-only. I didn’t know such a thing existed.
“Generational loans” mathematically stop working once you hit the 50-year point, i.e., you’re saving $20 a month by going with a 100-year loan. So now my fear is that this 15-year I/O thing could really perpetuate the housing bubble. If FB’s just roll their current suicide loans into longterm I/O’s, and in effect, create a new paradigm where everyone effectively rents permanently, then maybe there is no end to any of this? Ugh, I hope there’s something I’m missing here. Any thoughts?
I think we can put funny loans and interest rates asside at the moment. Judging by the recent headlines home buyer confidence has been shot all to hell. It’s cliche but we really are running out of greater fools. More and buyers are stepping back and waiting for the innevitable.
I have wondered if the housing bubble might morph into something like what you’ve mentioned because there is so much money involved. Guess it would be kind of like the Japanese not writing off thier bad loans. Just put the principle on the balance sheet, collect the interest, and let it ride for 15 years? OTOH, seems like this scenario would dry up funds for new mortgages. Perhaps banks will only offer this to current mortgage holders who are in trouble and need to refinance.
A fairly significant percentage of the homes bought over the last couple years were bought by house flippers and I think they have zero interest in getting into 15 year interest only loans. These are people that had investment horizons of 15 weeks, and 15 years from now might as well be another lifetime. They’ll sell at a loss or go through foreclosure. I doubt the banks will be willing to hold onto these things for too long.
As for the real buyers who got suckered into the ponzi scheme, how many of them will actually live in these places for 15 years? When they sell, they’ll have to sell at what the market will bear and there are plenty of people, such as myself, who are perfectly willing to rent and avoid taxes and insurance costs and higher “mortgage” (interest only) payments (in other words spend less money for the cost of shelter) who won’t pay what they’re asking in the short run, which will be an amount that can be financed with an interest only or option arm suicide loan.
No amount of creative financing will do away with the damage that this mass hysteria has wrought.
I think you’re right about this. However, after reading posts by NHZ on this board regarding the RE market in the Netherlands, I find myself wondering what we might see next.
As Happy Renter says, when many of these recent buyers discover that they cannot afford to go out to dinner, go on vacation, buy new clothes, and have to drive their car for 10 more years……they may have to sell.
Yes, there are 15 year interest only loans available. They have fixed rate and payment for 15 years, with the balloon payment at the end. One I am aware of has a rate of 6.75%. Any principal paydowns reduce the next payment since payments are based on the current balance at the interest rate. These loans have stability in rate,payments and principal and are considered much more conservative than Option ARMs which adjust monthly, have extremely low payments which result in negative amortization (”principal additions”.)
Oh just get the 6 to 61/2% fixed note for 15 to 30 years . I think it will become the fashion to pay a note off at the end of a term . It would be a good idea for retirement also since the baby boomers can’t count on real estate to save them .
I think you mean when many of these recent buyers discover that they cannot afford the dinners, vacations, clothers, and cars they’ve ALREADY bought purchased on credit they will have to sell.
Not being able to eat out is not a reason to sell. Being desperately overextended with no buyers is.
If that were to happen, then the idea of “the American Dream” can be kissed goodbye, and elected officials, such as Bush will made accountable for ending the possiblity for people achieving “the American Dream” of owning their own home.
Los Angeles Friends In Deed
bush will be made accountable for ending the american dream? dream on. there is no such thing as accountability with them. history will be rewritten to avoid it.
A fifteen year interest only is a fixed rate product that is ammortized over 30 years. I/O first 15 then fully ammortized for the next fifteen. The payments are not that much lower, because they are traditionally .25 to .5 higher than a typical fixed rate. Even a 15 year I/O is not going to stop the collapse.
Waiting in SD’………Right ….Just get the regular 15 to 30 year fixed loan while the rate is still kinda low .
Wait a second , wait until the prices come down more .
Here in Cali, as long as people can find the way to keep paying the current prices (or higher prices), they will continue to do so. The only thing that matters to most people now is can I making the monthly payment. So, yes, any financial innovations that allow for lower payments will work to support current prices and maintain the bubble. We’re still in mania mode, imho.
A negative ammortization loan is going to provide a much lower payment option than a I/O. For instance $500,000 I/O payment is $2,800, a negam payment would be around $1,600. A thirty year fixed payment would be around $3,078. With the frenzy slowing down, reducing the payment by $278 is not going to make a huge difference.
I meant since the frenzy is over.
Particularly because in SoCal many of the people who are overextended already have the Negam loans. Anyone know where figures about the precentage of loans in the last few years that were Negam can be found? I always see the figures about percentage of adjustable rate loans but never anything about what % are I/O’s or Negams
Old news. Google is your friend.
http://www.msnbc.msn.com/id/8574006/
:d
Yet according to UBS analyst David Liu, 40 percent of mortgages over $360,000 that have closed so far this year are “neg-am” loans. And the Internet is crawling with all manner of come-ons, offering products with names like “Name Your Payment” loans.
Pardon please. I meant to put parentheses around the above. I also meant to do this:
I think that 15-year interest-only loans will be as long-term successful as 8-track tapes were. No gimmicky loan will matter when the public in general realizes that property values are going down, not up. Once there is aceptance of the decline, these bozo loans should disappear and, like locusts, wait for the next cycle.
Those homes languishing on the market have already lost a good amount of value, it just won’t be realized until they actually sell months or years from now.
Good point. There’s no way the market could drop to the inventory levels of 6-12 months ago without substantial (20-40%) drops in prices …at least in the AG “frothy” areas.
When I was a kid collecting basketball cards I showed my dad a Beckett price guide to prove what my Michael Jordan card was worth $400. He smiled and told me,” It’s not worth anything until you sell it.” A week later I went to the local card shop to cash in. The shop owner was exited to see the card but took out a magnifying glass and sited a slightly nicked corner. He offered me $30 for it.
I went to another shop and was offered fifty. I had to concede to my card being worth $50 because that was all anyone was willing to pay for it.
Our lease was up on our previous rental. The landlady wanted to sell it. We started discussing the possibility of us buying it because she wanted a smooth, fast and hassle free sale. She asked me what I thought it was worth. My response was $925k, which in reality was probably about $50k lower than the market at the time. I started low because I figured I would be prepared to negotiate up another $50k or so. A day later came her indignant reply that it hat ‘appraised at $1.4M’
I didn’t even bother to respond because I knew there was absolutely no way we would find a middle ground. Good luck lady.
We moved out, got our security deposit back and never spoke again.
Within a couple of weeks the place was painted, gardens trimmed, new fence etc. and ready for sale. Asking price? $1.15M So much for her ‘appraisal’. Even in this crazy market there is no way it would bring that. There is a small chance it might have brought that at the peak.
Anyway, the place sits on the market for about a month before it is suddenly withdrawn. We don’t know why, but it appears no longer for sale.
Yeah, but you could have traded it for two “$200″ cards, and you and the trader would have been smiling all day.
That’s how bubbles work, until a parent comes along and spoils the fun.
Clever analogy.
yes. that is how prices are set, by how much the market *can bear*. i can price my house at 10 million (its not even worth a million) but would anybody would even think of looking at it? none. that is the mass delusion we have in RE today.
It’s good to learn these things at a young age.
In Sacramento last month 2000 homes sold and 13000 homes sat.
13000 homes will be reduced or pulled from the market. Sales continue to decrease and inventory continues to rise.
they are running out of land in the bay area. but we could convert all of the vacant commercial property into condos and there would be enough to absorb all ‘undocumented’ workers for the next 20 years. I left the Bay because the area and housing are all so overpriced that any sane person can not even begin to figure out how to live there in peace. The whole Bay area ‘blows’ Let Arnold come and “i’ll be back’ save the area (or triple the bridge tolls due to stupidity).
Yes, it’s funny to see McMansions going up shoulder to shoulder on former industrial sites in really ugly locations where industry is still going on. They build enourmous tall walls around these developments to block the noise and create the illusion they aren’t located in winoville. But the drive in and out on cratered 1 lane industrial roads with heavy trucks gives it away. I keep asking myself, where are we going to have jobs in the future when all we are getting built is more mega-shopping malls with low paying retail jobs and tiny expensive condos built on places you used to go to work ?
You’ll know we are turning the corner to sanity when these McMansions you mentioned are turned into low wage sweatshops and shopping malls are converted into factories churning out gee gaws for rich Asian consumers.
In this video, Chris Thornburg talks about how there’s classically a year delta between the inventory runup and decreased sales volume and actual, real price declines. Hopefully it will happen sooner than later this time, but I’d be surprised if we didn’t start seeing some aggressive price drops by this time next year…
If I remember correctly, after he gave his forecast he admitted that he was flying blind. This is new territory and the past isn’t a very good guide on what to expect.
It was my impression that he made some contradictory comments, including the ones you cited.
Perhaps the method in which he conveyed information was tactical in that it was provided, but in a way that was numbing, so as not to cause a panic or cause a chain reaction.
Los Angeles Friends In Deed
Once the carrying costs exceed what the flippers can bear and lenders have to sell, we’ll be seeing severe price cuts. Lenders can’t sit on properties too long and faced with the inventory that they’ll be selling into they will have no choice but to price accordingly. That sets the comps ball in motion.
Then there could be low basis sellers that have to sell who will also price agressively. By the end of this summer we’ll see YoY decreases in many bubble markets. PHX, So FLA and SD bear watching…
dont forget the stock market is starting to suck wind. this will put even more pressure on the housing market.
Tom Davidoff, UC Berkeley: ‘It takes a while for people to figure out interest rates are higher than they have been for the last few years and when interest rates go up, housing affordability goes down, and that means prices have to go down too.’”
Before finding this site and Patrick.net, this very thing is what stopped my husband and I from buying. At first we were shaking our heads at housing prices, but figured we had the 20% down and while the PITI might be kind of high, but we could do it. But we finally came to the conclusion that if we were feeling somewhat stretched and had better than average income in a market with extremely low interest rates, who would be able to afford to buy from us if we ever needed to sell and rates had gone up? Payments would go from slightly ridiculous to astronomical.
And that’s why the whole “buy now or be priced out forever” BS doesn’t hold up. People with a decent work ethic, intelligence, and sensible financial instincts usually can afford a house. So, if you’re one of these people and you’re having a tough time given the current prices then who exactly is on the other side doing all the “pricing out forever?” Only in a select few locales of any sizeable population is it truly almost impossible to afford a place to own: Manhattan and any decent part of San Francisco (not the bay area, San Francisco itself) both come to mind.
Also, having lived in Manhattan and in Germany for decent amounts of time, sometimes there actually are places where land truly is scarce. But in Germany you’re talking about a country about the size of Arizona that is home to around 80 million people. And even in places like that, as we saw in Japan, if there is a mass hysteria that leads up to a dramatic and totally unjustified increase in prices that fall completely out of affordability range, then the market will correct itself.
On California.
‘here in California, the foreclosure rate is up 91 percent from 2005. One of every 1,382 households in the state is in some form of foreclosure.’
‘Some people are clearly in over their heads,’ said regional economist Jack Kyser. ‘If they had adjustable rate mortgages, the rates have been climbing. They’ve also got higher energy costs, and here in Southern California, inflation is growing at a faster pace than the overall country.’
I tend to think that the 20% decline from March is temporary. Could it be that the homes that are selling this Spring are made up of a greater percentage of households or speculators with financial problems. A flight to market with these kinds of sales might relieve foreclosure rate inclination as a blowoff with low volume.
I still do not hear anyone gagging RE at this point. Not until that happens will we see the beginning of the end.
Inventory is skyrocketing on Long Island according to MLS:
3/31/05 15,525
2/19/06 24,691
5/03/06 29,196
5/11/06 30,089
5/18/06 30,677
5/19/06 30,822
Wow! No spring bounce here! Notice the additional 145 homes for sale since yesterday.
Incredible! We’re pretty glad we didn’t buy one last year. Last year we could have stretched into a 2 bedroom fixer upper for 375K. Now for the same money you can get a nice 3 bedroom ranch for the same or less. Thanks to Ben’s blog, we just saved ouselves about 100 thousand dollars and a LOT of sleepless nights!
“Nowadays, from five to seven potential buyers will visit a typical open house, compared with 15 to 20 in early 2005, Perry said.”
Potential buyers?? More likely they’re desperate flippers in foreclosure looking for something to steal.
““Livermore realtor Mike Perry brings a book to read at his open houses now that the traffic of potential buyers has slowed considerably from the red-hot days of the housing boom. Call it one of the hidden signs of the slowing real estate market, which last month saw the lowest level of Bay Area home sales in five years.””
Hidden signs? No one showing up to buy is a “hidden sign”?
What are the obvious signs? LOL.
I went to an open house recently which had already been completely moved out of, the realtor had brought his own 12″ TV that he was watching golf on, and one of those foldable camping chairs. The guy was also clearly hungover, a 25 year old kid, just going through the motions-he seemed almost surprised when I showed up.
The RE hangover is going to be worse. There is no recovery in a day or two but drinking will help smooth things a little.
keep your eyes open for broken car antennaes.
They aren’t hidden signs…they’re signs realtors don’t like to acknowledge.
The immigration situation may make for any even more interesting situation to play out in Southern California.
“landlords” whom have grown dependent on “illegal immigrants” to get their cheap labor to do maintenance and to push up demand for the limited rental housing are in a bit of strange time.
If illegal immigration is stopped, and if employers who employ illegal immigrants are criminalized, then the “landlord’s get hit with a double whammy of loss of cheap labor and loss of demand for the limited rental housing in southern california.
And if, as some predict, that Mexico and United States become a union and the border between the countries no longer exists, then americans will begin to migrate down to some of the beautiful parts of mexico and further decrease demand for places like polluted, over-priced, over crowded areas like Los Angeles. And “landlords will be forced to pay higher pay for labor to do maintenance on their buildings, either through direct employment or through contract with companies that provide the labor.
So I have a hunch that those that are for continuing the status quo on illegal immigration, and the hiring of illegal immigrants, are rental property owners, especially the ones that own the most rental property, because they have the most to lose in profit.
Los Angeles Friends In Deed
An interesting article along that line of thinking
http://www.eagleforum.org/column/2005/july05/05-07-13.html
I hope it goes through as a link, sorry if it doesn’t
huh?
> And if, as some predict, that Mexico and United States become a union and the border between the countries no longer exists,
The concept of “law” is practiced differently in Mexico. It would take much time and effort to synchronze the systems. Think East Germany with West Germany except with a different language, little common culture, different languages and five times the income differential.
in a sense, LA really IS different. people are mad because 2 incomes totalling 100k (pretax) cannot buy a 3 bedroom house, but they’re competing with 6 incomes totalling 150k (after “tax”)
From the thread on Florida today, I think that some markets are so overbuilt because of speculator demand as opposed to real demand for a house to live in, inventory will remain high for a long time to come - even with price declines. In our area I read an article in the local paper that basically made it sound like houses built over the past five years had outstripped household formation by 2:1.
We want some Friday desk-clearing!!!!!
Buyers are just taking their time deciding. The buyers know they don’t have to rush anymore.
Man, am I tired of hearing this crap from realtors, and journalists who apparently are too dumb to call them on it. Buyers aren’t “taking their time,” buyers are disappearing. Look at the volume of sales falling, falling. If they were just taking their time, overall sales would hold steady (since the sales would merely be delayed a little) over time, not fall like they have for the past several months. Sales have fallen and will continue to fall, and prices have started to fall - and will start falling hard by August or September in those areas that peaked in July of last year (at least, that’s my prediction, since by then the YoY price declines will be trumpeted on all of the news services, and the sheeple will finally wake up and realize that, despite what the NAR says, sometimes prices do go down).
Sorry, first time using italics. I thought I turned it off.
check
Timely post. Just the other day someone on these boards was claiming how the Bay Area never goes down and that So Cal is going to follow it - houses will be worth millions even though ‘no one will be able to afford them’.
Need to find the name of that book he recommended again - something about it’s all different this time!
That was me. The book is The New Affordability Rulebook, written by Dr. Howe Muchamonth, someone most Americans are already familiar with. Obviously, you’re a newbie to this board if you haven’t heard of him. We’ve been talking about him for at least a year now. He is even better than Robert Kiyosaki.
THe market got to the price (in Bay area at least) where no sane person with an average wage/job could afford a house. Yet alone, the required fancy furniture, French maid, 2 Hummer’s, boat, jet-ski, etc. And the HELOC kool-aid party to pay for the above, and ARM reset will bring a new meaning to “break an ARM” and the associated pain. The yelling you hear, might not be the coyotes.
Which idiot is going to buy the $75 M home in OC?
rich idiot. there are plenty of them around.
It’s funny to read the ‘different this time’ posts.
I don’t know if it was this blog, but I remember reading a posted link to an old LA Times Article written back in ‘81/’81 regarding the real estate market. Amazing, since the only thing thats different this time is the year, but the herd/lemming/sheeple mentality is still the same.
I got another letter from the realtor that sold my home last August (Fremont, CA). He was asking for referrals and blamed the wet weather on low sales.
i love the quote from lepage “the sky isn’t falling,it just looks different this year” i wonder how many times he said the mencken prayer today? i t goes like this ” no one has ever gone broke by underestimating the intelligence,or the good taste,of the american people” should every realtor have a pimp for a brother so they have someone to look up to?
‘It takes a while for people to figure out interest rates are higher than they have been for the last few years and when interest rates go up, housing affordability goes down, and that means prices have to go down too.’”
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I figured that out last year re: interest rates… what people you talking about?
I dont get it? Last year it was ‘better get in now , prices never go down’. How would you like your crow served? Rare?