The Housing Bubble

‘Realtors work awfully hard to get people to understand the market and to re-set their expectations,’ Warren said. ‘But a lot of sellers have a number in mind, and they hold on for their price.’

Except for realtors who are also SOL sellers, which seem to be the majority.

wow… the market IS changing…. not too long ago, this would have been titled, “Unrealistic, stubborn BUYERS to blame for sales drop”

Only 10% job loss for SF. Those 10% must have all become realtors, mortgage brokers, or flippers to fuel the large price increase. Now, all of those jobs will magically come back so that the 20% appreciation can continue indefinately. Meanwhile, the smart people are leaving SF area in droves. Just ask the moving companies and UHauls which way trucks are going when full. Ciao to one CRAPPY place to live and raise a family. Looking for a bloodbath in SF.

Stubborn sellers are causing the data to be screwed. The current home data is garbage because sellers are holding out trying to get unrealistic prices. Once they actually sell the house we will see median prices drop in a lot of areas.Ive seen houses in arizona sit on the market for 5 months and still not sold after 10% price reduction. Something has got to give here.

Now, who can get more sarcastic than me?

“‘unrealistic, stubborn sellers’ will need to take some of the blame for the sales drop.”

But the ice melting right underneath their feet.

I hope it is the case of buyers have become smarter. The sellers now NEED to sell. The more they wait, the more will be the pressure and panic build up, the steeper will be the price cut, in the mad rush to the exit. P>P>P

My dream sequence..

I’ve been reading some of the comments posted in regards to when we’ll see major corrections, some of you predict 2007-08. As someone in the industry working as a mortgage broker, my opinion is that it will come sooner than later. The reason being that this time it is ‘different’. Different in that the plethora of information due to the web is mounting. Back during the 80’s and 90’s adjustment, the news trickled in from different sources and it was about 6 months off. Today, with zip, zillow, and blogs of first hand accounts, the information is traveling much faster, giving buyers and sellers (that are prudent enough to do research) a real time account of the market.

I’ve advised my clients to move into fixed loans, some bit the bullet and are sitting on 30 year fixed mortgages with no worries, while others, of course went a different route which personally worries me, but we all make our own decisions.

I do business in the greater Los Angeles area and have noticed inventories climbing not to mention my lenders getting more stringent on lending. Before some of you jump with glee, note that the downturn will affect all of us in some form or fashion, so, like I tell my clients, save your money, have at least 6months of living expenses socked away.

There are two areas in the South that I’ve been watching for almost a year. I started tracking listings there in November. Almost nothing has sold in the intervening months. No wonder — I saw only one or two price reductions in the whole lot during the entire seven months. I suspect that when the cuts finally come, and I have the patience of Job, they could all come at once and it will be akin to a price war. Whatever. I’m waitin’, like a gator in the reeds.

Hopefully the glacial-like slide to lower prices will keep the MasssHoles home…….. imagine that!

i like the Wile E. Coyote analogy someone here used earlier. He’s just run off the cliff and he hasn’t looked down yet - just like many sellers.

real speak from Realtytimes!!

Wow! I have come across this from a realtor, would not have imagined this could happen a few weeks back….things have changed for real!

Someone who is rooting for healthy CULLING of the Investor Herds!

“It will take time to clear out the inventory now held by weak investors — and by investors who will weaken under the burden of ongoing monthly costs. This is simply a healthy culling of the investor herd….”

“hopefully the worst result in most areas will be a general slowing of appreciation to something just above the rate of inflation….

http://tinyurl.com/l4uq5

http://tinyurl.com/l4uq5

“‘The pace of sales has slowed,’ CEO Timothy Warren. ‘That remarkable bull market is coming to an end,’ he said. Warren said that ‘unrealistic, stubborn sellers’ will need to take some of the blame for the sales drop.”

How can we compare the hypothesis that sellers are “stubborn” against the alternative that they enjoyed too much spending out of their home equity “wealth” gains, and now that the music has stopped, they cannot afford to sell lower than last year’s comp price, which they thought was somehow permanently locked in? We will not know the answer to this question for a few months, at which point sellers will either take their homes off the market (supporting the “stubbornness” hypothesis — i.e. they could afford to be stubborn because they did not really need to sell) or drop the prices to sell out of desperation (supporting the “underwater and need to sell now” hypothesis). If the latter is the case for a substantial number of sellers, then the market standoff will end in a bloodbath.

Yes indeed, seller are unrealistic.

My friend has a house on the market in Temecula, CA. It has been in the market for 62 days. Asking price is too high, price should be reduced by at least $60k to have a chance of selling now.

But you know, sellers will hold the price and time pass by and in 3 month the inventories would be more bloated and then they will reduce their price more than what they should do now.

All around me (here in Boston) I hear more and more residents begging the question of “why do we stay?” This is mostly in relation to the exorbitant cost of housing and the long cold winters. I can name a dozen people I know who’ve moved to North Carolina from Massachusetts in the past few years. I wonder if they’re all sticking together down there — little tribes of refugees who talk in that endaringly “retaahdid” way.

Like this,

ROOM TO NEGOTIATE BUT I NEED AN OFFER FIRST

http://washingtondc.craigslist.org/rfs/163928978.html
Problem is, offers would be hopelessly low . . .

My question:

Who in the world is buying right now? I guess they didn’t get the memo. Who are the 4,142 folks that bought in MA? I wonder what the motivations and circumstances were that surrounded those sales.

Don’t forget that we get the national sales numbers tomorrow (new homes) and Thursday (existing homes). Both at 10 a.m. From everything I’ve read here and elsewhere, it looks like these numbers could be a bloodbath, but we’ll just have to wait and see..

In one Rhode Island town I am tracking, there are plenty to choose for above 500K and below 400K. Most transactions are the expensive ones, keeping the medium price high. The lower market are dead, but still no decent house below 500K. I am waiting for the whole crowd of 500K to reduce their price. But it hasn’t happend yet. I do see they change agents and reset their”days on the market”. Like changing an agent will magically sell their house.

I blame the ‘Realistic, Stubborn Buyers.”

FORT LAUDERDALE · Mega-developers and the city’s mayor are shooting down a proposed affordable housing law, calling it unfair, communistic and doomed to failure. People could afford a place to live, the mayor said, if they were willing to work harder.

Mayor Jim Naugle, a conservative and brash politician serving his final term, said people mistakenly think they’re entitled to an affordable single-family house on a 40-hour work routine. They need to work more hours, and even then settle for a condo or townhouse, Naugle said.

“I’m supposed to subsidize some schlock sitting on the sofa and drinking a beer, who won’t work more than 40 hours a week?” he asked. “I deny that there is a problem. You can buy condos all day for $160,000.”

Naugle’s comments may be contested by the working-class citizens who’ve told the city they want a home but can’t afford it. But his ideas might hit home in other circles, where a city proposal to make developers slash prices or pay a fee was met with skepticism.

“We ought to let the free market work,” said Bill Scherer, a lawyer-developer on the city’s Downtown Development Authority.

The proposal asks developers to give up big money — $1.5 million on a 100-condo complex, for example — for the theoretical good of the community. The city’s law, as drafted, would make residential developers pay for affordable housing, either by providing it within their housing complexes, or paying fees into a trust fund to subsidize housing for the middle class. Families making up to $69,720 — which is 20 percent more than the area’s median family income — would be eligible for a government boost.

New York has rent control. The federal government has Section 8 housing aid. So, this isn’t the first time government has gotten involved in the real estate market to help people afford a place to live.

South Florida’s cities only recently decided housing prices had reached crisis level highs, and Fort Lauderdale is one of the first to seriously attempt passing a law to do something about it. The city is under pressure from Broward County to pass a law; otherwise, the county says it won’t allow another wave of construction of thousands of condos downtown.

“The concept of this ordinance is from each according to his ability, to each according to need, which is the Communist Manifesto,” said Naugle, who calls the proposed law a “luxury housing tax.”

“One person is working two or three jobs to get ahead and one person isn’t. Should we tax the person that’s working hard to get ahead, to pay for the one who isn’t?” he said.

Jim Carras, head of the private, nonprofit Broward Housing Partnership, countered the mayor’s Karl Marx rhetoric with a paraphrase from President Truman.

“`A decent place to live is the right of every American.’ We have maybe stepped away from how we fund it,but even the most conservative Republicans in Congress and the state legislature see a role for government,” said Carras.

Housing prices in Broward continue to shock some buyers. The median home price in Broward County in March — the price at which half the homes sell for more and half the homes sell for less — was $368,100 for a house and $202,600 for a condo.

Still, according to a recent study by Strategic Planning Group Inc., that means most condos are within financial reach of most buyers, though it might not be the size or location a buyer is seeking.

A debate about Fort Lauderdale’s proposed law might have been expected, considering what’s at stake.

“Gas is unaffordable. Now, do gas station owners need to go out and supply affordable gas?” said Doug Eagon, president of Stiles Corp., which built many of downtown’s big towers.

Developers said they would pass the costs to other buyers, leading to increased housing prices overall.

Major developers on the Downtown Development Authority originally supported the concept of an affordable housing regulation. But they don’t like the results. They want it rewritten to offer incentives to developers, and to spread the cost across the general public, by using tax dollars, for example.

The building industry is officially opposed. Brandon Biederman, director of government affairs for the Builders Association of South Florida, told the city that construction costs are going up, making the additional fees an even worse proposition.

A recent version of the law was soundly rejected by city commissioners last month and sent back for more public discussion and revamping.

City planning director Marc LaFerrier said he’s working on a new proposal, and it will likely be back in public debate June 6, at the City Commission’s conference meeting in the afternoon.

The news just keeps coming faster and faster. I love to watch the blame game unfold and it won’t be long before some attorneys start going after the HB’s and lending institutions as they have the biggest pockets. The hotter the market, the hotter will be the legal action.But I think for me the ‘hot button’ on all this current hype is that buyers just aren’t realistic….no, no, no oh the contre-jour is that all the buyers are priced out of the market (top of the Ponzi) and even if interest rates weren’t rising the jig was up…….

This is one big difference between real estate and stocks. At least with stocks, when you want to sell it’s pretty much instantaneous. As opposed to selling a house, where if you don’t get the high price you want, it just keeps dropping over a long period of time until you’re forced to sell. And all the while the price is dropping, you’re likely still paying upkeep on the house (mortgage payment).

RudeKarl, you are so right. I long for those simple days too when only doctors, scientists, and some lawyers (when it was still honorable to be one) owned the real mansions. Wal-Mart people and government people like me are not millionaires by trade. This is not a knock, just the truth. If you are making millions in gov’t, you are fleecing the people. We have to save and work hard to get there. However, these exotic loans have made everyone think they are a bazillionaire and worse yet, no taste. That home above does look like the local jiffy lube. Who in their right mind bought it, let alone built that. What is that style, if any? Right now I am looking into western South Carolina and the Nashville, Tennessee area. It is amazing what $200K buys and how great these homes look.

‘Realtors work awfully hard to get people to understand the market and to re-set their expectations,’ Warren said.

This guy should be a politician…I guess that is the double speak one learns before becoming a Realtor(tm)…I’m not going to re-set any of my expectations…..
Jobs may just be heading to the rust belt once again as cost of living and stable communities would benefit any employer wanting to actually produce something with a made in America label……

I enjoyed wawawa who stated that he thought that the property was over priced to the tune of $60,000. Can you imagine the seller coming to terms with the thought of lowering the price $60,000 and then having to accept an even lower price plus pay the commission on the sale? Damn, $100,000 of blue sky gone, poooof, and the reality of trying to enter ole age on SS….hee, hee, compare that to the illegals who will take their profit and SS and move back to Mexico, hire a maid, cook and housekeeper…….

http://www.boston.com/business/globe/articles/2006/05/23/gillette_facility_to_be_closed/

Gillette facility to be closed

100 jobs will be cut in the 1st shutdown since P&G buyout

By Jenn Abelson, Globe Staff | May 23, 2006

Procter & Gamble Co. said yesterday that it will close one of Gillette’s two plants in Devens by the end of the year and eliminate at least 100 jobs.

The shuttering of the facility — which makes packaging materials for razors and other personal care products — represents the first Gillette factory closing in Massachusetts since P&G bought the company last year for $53 billion. The Cincinnati consumer-products giant is also planning to downsize Gillette’s warehouse and distribution facility at Devens. Both the packaging and warehouse operations are moving to a P&G plant in Greensboro, N.C.

Earlier this year, P&G said it would shut down about half of its distribution centers worldwide to consolidate operations. Massachusetts is home to four major Gillette factories, including two at the Devens development, formerly the site of a military installation on land in the towns of Ayer, Harvard, and Shirley. Over the past year, labor groups have complained about the facilities on the former base for alleged labor violations and Gillette’s use of temporary employees instead of permanent hires.

The job cuts in Devens would be on top of the estimated 5,000 positions P&G said last year it would eliminate.‘‘P&G and Gillette conducted an extensive analysis of both companies’ North American warehouse and pack-to-order sites and determined this is the best move going forward,’’ said Eric Kraus, a Gillette spokesman.

P&G said it plans to maintain the Gillette plants in South Boston and Andover. South Boston, with about 1,800 employees, will continue to develop razors and blades, and Andover, which has about 400 employees, will manufacture aerosol products, including Tag body spray.

Kraus said ‘‘no decision has been made to change our second packaging facility in Fort Devens,’’ which employs about 1,000 workers. The company has not decided what to do with the shuttered Devens plant.

But Peter Palandjian, chief executive of Intercontinental Real Estate Corp., which leases both Devens spaces, said P&G has not signed new leases, which expire next year. Palandjian said brox kers have toured the site, and he plans to list the space in the coming weeks.

‘‘We are not confident that Gillette is staying,’’ Palandjian said.

Lucas Vásquez, a 10-year employee at the Devens plant that is closing, said workers were told last week it will shut down Oct. 31.

The Devens workers are mostly employed by third-party contractors. Loren McArthur, lead organizer of the Merrimack Valley Project, a coalition of church and labor organizations that has called for improved working conditions, said the group is ‘‘deeply concerned’’ and finds the decision to close the plant ‘‘unacceptable and in direct contradiction with Procter & Gamble’s stated commitment to maintaining a strong presence in Massachusetts.’’

The coalition has protested Gillette’s treatment of temporary workers, alleging that they were not paid for all hours worked, were not paid overtime beyond 40 hours, and were not hired again after they complained about conditions. Earlier this year Gillette agreed to study ways to create more job stability.

‘Losing 150 to 200 jobs is not acceptable at this time, especially when these communities are reeling from the flooding and we’ve been seeking to specifically address job stability and workplace improvements at this location,’’ McArthur added.

Gillette said the work handled by at least 100 temporary employees at the Devens facility will be moving to Greensboro. Kraus could not identify how many permanent workers are employed at the Devens plants, or how many workers are being cut because of the reductions in the warehouse and distribution operations.

State and local officials were surprised by P&G’s plans. The Boston shaving products company was the first tenant to sign a lease 10 years ago to open a massive built-to-order warehouse and distribution center in an industrial park carved out of a former military base.

Joseph Donovan, a spokesman for the state’s economic development office, said he was unaware of the move and declined to comment further. Janet Hookailo, a spokeswoman for MassDevelopment, which oversees the Devens park, said no one from Gillette or P&G had contacted the group.

Since the P&G takeover, more than 400 Gillette jobs have been cut, not all merger-related. Gillette’s corporate headquarters at the Prudential Tower in Boston, which employed about 1,100 people on 17 floors, is expected to take a big hit.

Much of the marketing and sales staff is expected to be gone by the end of the year, except for some positions dedicated to blades and razors, according to executives who said they could not be named because the company has prohibited employees from speaking to the news media. Other duplicate positions in departments such as human resources will be eliminated by early next year. A small toiletries development lab in South Boston is also being moved to Cincinnati, the executives said.

The company is considering several options for where to locate its downsized corporate operations, including condensing to several floors in the Prudential Tower or moving to South Boston. Gillette’s lease at the Pru expires in 2009. All Gillette employees were notified of their job status by April, but P&G has refused to say how many positions it is eliminating or how many employees are transferring to Cincinnati.

said the group is ‘‘deeply concerned’’ and finds the decision to close the plant ‘‘unacceptable and in direct contradiction with Procter & Gamble’s stated commitment to maintaining a strong presence in Massachusetts.’’

The strong presence will be that if you are not going to put your welfare system on the backs of corporate America…

Don’t know how that ‘if’ got in there…..

It REALLY is different here in Seattle. Price wars over POS properties in bad parts of town, zero inventory, CA equity refugees streaming into the state, hordes of asians buying up everything around Microsoft as MS plans to hire 10,000 new people and those properties are “sure thing”. RE agents advising to “buy now before you are priced out forever”.

Ooops. That was a year ago.

Inventory building. More “price reduced” signs. MS NOT hiring 10,000 people. In fact they just told a bunch of temps to “stay home” for a week so they can get back within budget. Transaction junkies (er. RE professionals) spending more money for ads And WAMU continuing to lay off.

The much anticipated “spring buying season” is a wash at best. On one hand there is a bit of a dead cat bounce on the high end fueled by the last of the CA equity refugees and move-uppees. On the other side is “gravity” which already tugging on the low end.

In the end an ebb tide sinks all boats.

CONDOFLIP HAS ADDED A “PANIC” BUTTON.

http://www.condoflip.com

Oh man, this is main page material.

Seems the button has already been metaphorically pushed !

Long Island Inventory:

3/31/05: 15,524
2/19/06: 24,691
4/30/06: 29,427
5/11/06: 30,089
5/22/06: 31,092

Inventory has doubled since March 2005! Wow!
No spring bounce here!

Ring out the old ring in the new. Bring out the old, bring in the new!

A Tsunami of new listings!

Queens Creek, AZ summary from Realty Times.com (Pat Hune):

realtors I have spoken with say the market is very slow. There are so many resale houses on the market from investors who bought last year plus the builders are offering huge incentives to buy new so the competition for buyers is fierce. The builders have had a lot of cancellations as speculators bail out so they are selling these cancelled homes at bargain basement prices to reduce their inventory. The most saturated segment is the smaller 3BR, 2BA house which was a favorite of investors. These houses are not upgraded and the investors are trying to cash out. Some investors are feeling the pinch of house payments as they did not expect to have to hold these properties for a long period of time. Many investors have unrealistic price expectations and start way too high. In some subdivisions every third house is for sale because the builder allowed investors to purchase.

I wish I had better news for my Queen Creek sellers. However, summer is the best time to sell in the Phoenix area so I recommend doing basic upgrades, putting the house on the market at a competitive price and see what happens. If it doesn’t sell either rent it out for a year or wait until next summer to see if the market has improved.

ROFL,

Only question I have is “have you killed the mold where the floods were?”

See, they tole djoo about the Summer Buying Season, especially in California’s high desert, where summers are only in the 90s-100s (F). Now don’t you all feel like fools! Ahahahahahahahahahaha!:

http://tinyurl.com/ec87d

“At This time it is more of a buyers market lots of inventory. However, come summer-time the market will most likely take a shift more towards a sellers market. Given this analogy, NOW is the best time to buy or invest in the High Desert areas.

YES, This is the time to invest in these secret get away areas, wait another 5 years housing prices will be out of reach!!!”

MSNBC
keller wms dude kying through his teeth- “still going up”
why don’t they ask him to name one zip code

INVENTORY
San Diego currently has just shy of 21000 listings according to Zip Realty. Conventional wisdom says this is X months of inventory at Y sales per month, so if for example 4000 properties a month close in San Diego it would take just over 5 months to clear the inventory.
The math however is more complex, since even as 4000 sell, 5000 NEW properties are listed per month substantially changing this simple months inventory and essentially doubling it.
Many homes will not sell at all, and those which do, are either priced lower or sit right on the beach…

Why lambast people for trying to get the best possible price for their homes? Or realtors for doing their jobs, which is not to pontificate on the state of the market, but to sell your home? It’s up to the buyer to do their homework and make the best possible deal, in whatever market they happen to be in. It’s also irrelevant what someone paid 2-, 3 or 5-years ago, or what you think it might be worth next year. If you need to buy, it’s what the property is worth right now.

I think that goes both ways. The market forces and credit conditions which drove prices sky high a couple of years back are no longer in place, so that said, I think if you NEED to buy now, then buy. It is important when you do though to understand clearly that there is a very good chance your purchase will devalue substantially over the next few years. Most of us cannot afford that kind of loss.

People are delusional. I still see no evidence of a ‘crash’ in my town in MA. Is the market slower than last year? Yes. Can you still sell a property if you price it properly? No Doubt. In my town a house just sold for $550k in one week because the owner priced it properly.

I just checked the recent sales prices of condos in Somerville (where I lived last year) and they are still moving for ludicrous prices w/ 10-20k discounting. Big deal. Some still sell for asking.

The Victor Valley is SoCal’s best kept secret? The place was a shithole 16 yrs ago when I first saw it. And now it is just a much more overbuilt shithole. Give that realtor a prize for her doubletalk (and didn’t even proofread her post).

What happened to Condoflip.com. They used to have a saying “Bubbles are for bathtubs!”. Are they quietly acknowledging that we have been right and that they were fooled.