Fulfilling The Housing Bubble Prophecy
All across the US, people are editorializing on the housing bubble. “I’m buying a home in Buckeye. I see an awful lot written about the real estate ‘bubble’ bursting, but I’ve yet to see evidence of this happening in Phoenix. In the overall Phoenix market, inventory is up more than 10 times year-ago levels; prices are up 70 percent over 2004 levels; yet sales dipped only 7 percent in the first quarter of 2006. Is this evidence of a bubble bursting? I think not.”
“The media’s bubble talk could become a self-fulfilling prophecy. It’s easy to write about the doomsday scenario because it makes for dramatic reading, but the problems start to arise when it has no basis in fact and readers actually start to believe it, much like the overhyped Y2K bug.”
The LA Times. “Month after month, as interest rates rise and building starts stumble, we hear that the sky is falling. Alan Greenspan and his successor, Ben Bernanke, in separate speeches, announced the end of the housing boom. They are certainly correct that the market is slowing. But the sky still isn’t falling.”
“Unless you’re a real estate agent, mortgage broker, builder or go-go speculator, and nowadays, we realize, that includes a distressingly large number of people, this housing slump isn’t going to bonk you on the head like a falling acorn.”
Another said, “Thanks to the real estate bubble, Monterey could become ‘Salinas-adjacent.’ Earlier this month, the New York Times gave Salinas, if not a raison d’etre, at least a dubious claim to fame: It’s the least affordable place to live.”
“I know the bubble’s about to burst when my fellow twentysomethings, recent college grads who just a generation ago took on roommates to make rent, start obsessing about interest rates and property values.”
“The problem is, people who can’t afford overpriced homes are gobbling them up thanks to interest-only and sub-prime loans. Los Angeles County residents spend, on average, 40% to 50% of their monthly household incomes on mortgages. And with the newly acquired home comes collateral for more loans; in other words, an inflated sense of self-worth. On paper, of course.”
“Thinking of a house as a home instead of a get-rich-quick opportunity shouldn’t be such a quaint idea. Nor should buying what you can actually afford.”
And from Florida. “The top executive of the Orlando area’s Realtor association is warning members that they may be in for a shock and some pain if the residential real estate market continues to soften. ‘For some of you, it will be a scary thing,’ Belton Jennings said to several hundred members during an association luncheon this week.”
“Jennings noted that about 86 percent of the more than 11,000 local Realtor members have been in the business less than 10 years, and existing-home sales in the Orlando area have set annual records for the past 13 years. During the past year alone, the local association’s membership swelled 26 percent to 11,897 people. So any softness in the market will be magnified.”
“As the inventory rises to record levels, mortgage rates edge up and pay raises trail home prices, everyone ‘is becoming edgier,’ Jennings said, buyers, sellers and agents. If it continues, he said, some real estate offices will close.”
“‘Marginal agents will retire faster,’ he predicted, and consolidation within the industry will continue. ‘The big get bigger,’ he said, and midsize offices will be squeezed out.”
“‘There is no [housing] bubble in Orlando,’ he said. ‘We still have demand for housing, and jobs are being created.’”
This is about the 50th time in less than a week I’ve heard the Y2K thing. Nice try NAR.
‘11,000 local Realtor members have been in the business less than 10 years, and existing-home sales in the Orlando area have set annual records for the past 13 years. During the past year alone, the local association’s membership swelled 26 percent to 11,897 people’
‘There is no [housing] bubble in Orlando,’ he said. ‘We still have demand for housing, and jobs are being created’
This in a speech telling the members many will be out of a job soon.
“The media’s bubble talk could become a self-fulfilling prophecy. It’s easy to write about the doomsday scenario because it makes for dramatic reading, but the problems start to arise when it has no basis in fact and readers actually start to believe it, much like the overhyped Y2K bug.”
hehe, believing did not make it so. With the housing bubble, well even if we had the government censoring all media containing information about the housing bubble, it would eventually collapse under its own weight anyways. We’re just sorta speeding up the process.
Look. Y2K would have been a serious problem if no one had done nothing about it. The late 90’s saw a huge mobilization of programmers to identiify code which could be problematic and fix it. At work we identified everything with a processor, and then determined if it had any date depedency. For software that did, we fixed it. If we hadn’t fixed it then guess what? On 1/1/00 it would have failed. What people who compare Y2K to RE don’t appreciate is that had we sat and done nothing, Y2K would have caused problems. If we sit and do nothing about RE, it will cause problems. That is what we seem to be doing.
That brings up the big issue with jobs that prevent problems.
It is very difficult to measure avoided problems.
Unless, you let a couple minor problems get through and extrapolate.
My only concern is if lending standards don’t tighten up. I guess we will have to see some financial industry bankruptcies for that to happen. If not the lending will continue unabated, this is the real problem, and a reason the foolishness is lasting this long.
yes, totally agree. We probably need a MAJOR blowup of a large bank or something similar before they start tightening credit standards. Banks are still convinced there is zero risk in real estate.
My only concern is if lending standards don’t tighten up.
How could they not?
How could they not have in recent past?
That’s easy… no reason to. It’s damned hard to lose money on a fast appreciating asset. Any old FB could easily refi or sell in a hot market.
“Unless you’re a real estate agent, mortgage broker, builder or go-go speculator, and nowadays, we realize, that includes a distressingly large number of people, this housing slump isn’t going to bonk you on the head like a falling acorn.”
If the housing bubble is going to effect “a distressingly large number of people,” then how can it not effect everyone? Just wondering how they rationalize that statement with their belief that it won’t have an impact on the economy at large?
Most people don’t have to worry about falling acorns if they hang out under the watermelon trees…
Russ, that was Amazing(ly funny)!
It won’t bonk me on the head. I don’t own real estate but have been saving lots of money in IPSs and municipal bonds, even buying precious metals. I have trailing stops on my individual stocks in case of a correction of 10% or more. I read a piece by Charles Hugh Smith (May 25 blog) in which he quotes from Thornberg that the prices of houses bought in 2004 will be the same price in 2011 or 2012. I enjoy my luxury apartment. Think I will buy a house in 2013.
Trailing stops aren’t fail-safe. First, just because your trigger is 10% doesn’t mean you’ll limit your losses to 10%. Second, even a one day 5% DJIA correction will kick in the “speed bumps”, giving every one else a chance to get their sell orders in; once the market reopens, your losses could be huge.
OT-I was watching the movie the Money Pit last night with Tom Hanks from 1986 and I immediately thought of this blog. What a great housing bubble movie. I was too young to know about the RE thing then but I guess it was an up RE market back then too, although not like now. The best Housing Bubble line in the movie was in the beginning was when Tom’s RE agent was trying to sell him the house and telling him it was a distressd sale, he said, “you can take advantage of some one else’s misfortune, thats the essence of real estate”.
Interesting observation. Since I have not seen that movie recently, I had not thoughout of the similarities. Since 86 was still a bull market, the movie had to be some sort of premonition of what was about to come. They should reply it on tv now, or shoot a remake.
I am at home with a newborn.
It is amazing on the lesser cable channels the numbers of movies being recycled from the early 90s with tie ins to the bubble.
Falling Down
Money Pit
are the two that my sleep deprived brain can think of right now.
Congratulations SunsetBeachGuy!
Something even more fascinating than bubbles..enjoy!
thanks
“I’m buying a home in Buckeye. I see an awful lot written about the real estate ‘bubble’ bursting, but I’ve yet to see evidence of this happening in Phoenix. In the overall Phoenix market, inventory is up more than 10 times year-ago levels; prices are up 70 percent over 2004 levels; yet sales dipped only 7 percent in the first quarter of 2006. Is this evidence of a bubble bursting? I think not.”
This could be the stupidist man on the planet.
I don’t think this is stupid. The facts may be alarming, but price declines are NOT a fact yet.
In some EU countries, housing was extremely overvalued 5 years ago already (even more than the US now), but prices have increased every since, while inventory increased and sales were stable or a bit lower.
With some help from the FED, even Phoenix home prices could keep increasing while inventory grows even more. Keep an eye on the OFHEO numbers; as far as I can see they still indicate increasing prices in 2006.
Price declines are a fact in Arizona. Ask any realtor.
but are the declines really significant?
I’m reading about reductions like 5% in the averages for most US bubble areas, that is not much considering the runup of previous year(s). It’s more like a small correction in an uptrend …
These things take time. Right now basically nothing is selling in PHX and sellers are pricing their houses at last summer’s prices. The explosive increase in inventory is proof that houses are priced more than the market will bear.
At some point the sellers will be forced to capitulate and make real cuts in prices.
P.S.: I just read the first bearish RE comment for this year in my local Dutch newspaper, not in the section devoted to RE of course. There were more bearish comments here a few years ago, but when prices started increasing again they magically disappeared.
Story was from a newspaper reporter who had to sell his own home because he purchased a new one, and noticed that the whole neighborhood seemed to be for sale. Because of that he decided to lower his asking price and sold in two weeks; but he still got out with a huge profit over his purchase price from a few years ago.
He mentions that most of the homes that were sitting on the market for more than a year (quite normal over here) had totally unrealistic asking prices; and they are often under contract with the same RE brokers.
A 5% decline in 5 months in the spring in the face of 5.6% GDP growth and lowering loan demand is significant. It’s nothing less than earth shattering. Sorry you don’t see it. No need to argue it will all become indisputable by fall.
well … we had sudden 10-30% price declines in some hot areas in NL about 5 years ago; proved to be nothing more than a bump in the road.
You could be right that this is the beginning of a major correction, but I wouldn’t consider it serious as long as the average price is still above the level of 1-2 years ago.
we are in a classic freeze. sellers are looking back in the rearview mirror at 2005 comps and buyers are looking through the windshield forward. this is causing transactions to FALL and soon prices in aggregate will follow. the only question is when, exactly how much, and for how long. the only wildcard is another major terrorist attack which causes the Fed to cut rates all the way back down to 1% again. this is doubtful IMO unless the liberals win congress/presidency and leave us wide open and vulnerable to al qaeda.
Who was in power on September 11, 2001?
Wasn’t it the guy from Texas?
Bush had 8 MONTHS, Clinton had 8 YEARS.
I sleep good at night with Republicans in charge.
Bush was told about the attack before it happened and ignored it.
Clinton expressly warned Bush about Bin Laden, he ignored it.
3000+ killed on Bush’s watch.
It’s going on 5 years later, still haven’t found Bin Laden.
Sleep well.
And Clinton was offered Bin Laden on a plate and chose to do nothing. He did nothing for 8 years.
Play your game if it makes you feel good. I place the blame where it belongs: An evil, twisted Jihadi death cult.
America has rejected liberalism. America has rejected the politics of Nancy Pelosi, Howard Dean, Harry Reid, Teddy Kennedy, Hillary Clinton, William Jefferson, Bernie Sanders, Barney Frank, et al. America does not trust these people to protect the country. Republicans are not perfect, but they are the best choice given the alternative.
Please give evidence of Bin Laden being offered on a plate.
Clinton ordered a missile strike on an Al Quada camp in 1998. He tried to kill Bin Laden.
It is now 2006. 3000+ Americans were killed on US soil in 2001. Bin Laden was responsible. Bush has been president for almost 6 years. He has been Commander in Chief the entire time. We have a republican senate, house, supreme court, and media.
So, where’s Bin Laden?
The fact is, Bin Laden was cornered in Tora Bora and was allowed to leave by Rumsfeld, the Bush appointed SecDef.
Talk about being given his head on a plate.
Please stop attacking the Democratic party, and focus on the housing bubble created by republicans-lax regulation, corporate welfare, and a republican Fed Chair who only cares about making his republican banking buddies richer. This is the bed that the republicans have made.
Go back to sleep.
December 5, 2001
Clinton Let Bin Laden Slip Away and Metastasize
Sudan offered up the terrorist and data on his network. The then-president and his advisors didn’t respond.
By MANSOOR IJAZ
LATimes.com
President Clinton and his national security team ignored several opportunities to capture Osama bin Laden and his terrorist associates, including one as late as last year.
I know because I negotiated more than one of the opportunities.
http://www.infowars.com/saved%20pages/Prior_Knowledge/Clinton_let_bin_laden.htm
That article is an unconfirmed, one man account.
Check out the 60 minutes piece on Bin Laden being allowed to leave Tora Bora.
The truth shall set you free.
U.S. Concludes Bin Laden Escaped at Tora Bora Fight
Failure to Send Troops in Pursuit Termed Major Error
By Barton Gellman and Thomas E. Ricks
Washington Post Staff Writers
Wednesday, April 17, 2002; Page A01
The Bush administration has concluded that Osama bin Laden was present during the battle for Tora Bora late last year and that failure to commit U.S. ground troops to hunt him was its gravest error in the war against al Qaeda, according to civilian and military officials with first-hand knowledge.
http://www.washingtonpost.com/ac2/wp-dyn/A62618-2002Apr16?language=printer
“Clinton ordered a missile strike on an Al Quada camp in 1998. He tried to kill Bin Laden.”
Wasn’t this the little incident he tried to use to distract the country from the fact that he was f*cking a little girl?
She was only blowing him and being fondled by him.
http://www.youtube.com/watch?v=nP5FunbZvJ8&search=bill%20clinton
Hey Barnie Frank, Nancy Pelosi and all keep getting re-elected… 51% does not a rejection of the minority make…
I would sleep a hell of a lot better if we had someone even slightly competent in the White House. Beating up on the domestic political opposition does nothing to make us safe.
The lingus may have a new handle.
Read Gerald Posner’s _Why America Slept_. Clinton himself admits that he screwed up on bin Laden. In 1995 Sudan offered to arrest bin Laden and hand him over to any country that had a legitimate offer to criminally prosecute him, but Sec. of State Warren Christopher and National Security Advisor Anthony Lake didn’t think it was a genuine offer and that Saudi Arabia had the best claim and responsibility to prosecute (of course, they were still secretly funding bin Laden under an agreement between bin Laden and Prince Turki). The U.S. asked Egypt to prosecute, and they declined. The Sudanese suggested they would hand him over to the U.S., but the U.S. instead asked Sudan to expel him, which they did in May 1996. A CIA plan to intercept that plane while in international airspace was turned down by Clinton. bin Laden’s plane landed for refueling in Qatar, which refused to allow it to land until the U.S. gave approval, which it did. It continued on to Pakistan without being intercepted.
Price declines are a fact in Central Florida.
Sales falling, inventory exploding. I think if you were to ask any economist (except David Lareah) these are exactly the early symptoms of a bursting bubble.
Also 2004 was before the bubble hit Phoenix. What are the YOY prices.
He’s still stupid.
yes, but they can be VERY early symptoms.
As I mentioned before, we have seen this for five years now in some EU countries and prices are still increasing.
nhz-
How do the debt loads of the Dutch contrast with those of Americans?
it’s impossible to compare because of the tax structure.
During the last 15 years, the Netherlands went from one of the biggest savers (at the personal level) to a big debtor; all thanks to the housing bubble. Personal debt has ballooned here lately but financial authorities tell us not to worry because personal assets (-= housing) has ballooned even more.
Our central bank worries about only one thing and that is that (despite all their efforts to discourage saving) some people still have money on savings accounts instead of spending every last dime on consumption.
nhz, I’m having troubles following your argument. Up above you seem to be confident that EU housing prices will continue to rise robustly–which is not a wrong claim to make if you can present evidence to back it up– but here, you are spelling out the conditions of a bubble just waiting to burst, even if it has not done so quite yet.
Machinist,
if you follow my contributions to this blog you can see that I’m not confident about future price increases in Europe at all. I’m just stating the obvious facts up to now. Longterm, I’m sure real home prices will decline strongly in many EU countries (but regarding nominal prices, I have no idea; I fear that they might remain near the current ridiculous level).
I’m just spelling out that the bubble has been ready to burst in Europe for at least FIVE years and despite that it continued growing and spreading. I think it is dangerous to assume that the US bubble is over and done with.
I know that most readers here claim that for some reason the US IS different and that the US bubble WILL burst even if the EU bubble keeps growing, but I don’t buy that argument. The EU and US housing markets are just part of the same world-wide credit bubble.
Thats EU, It’s different here.
“So there was an enormous translucent dome covering the entire city of Phoenix. It had the words “Housing Bubble” shimmering in hazy hundred foot high letters on it. Out of the sky a giant hand holding a mile-wide pin rammed it home tearing a growing rift in the side of the giant structure. Is this evidence of a bubble bursting? I think not.”
the giant hand of mighty Ben B pricking the bubble?
“Death by 16 (Rate) Cuts”
prices are up 70 percent over 2004 levels
You know the drill, when YOY numbers start looking bad, just go back another year or two or three or ? to make things appear OK.
…No worries, prices are up 70 percent over 1995 levels.
That is literally the definition of a bubble bursting!
“…everyone ‘is becoming edgier,’ Jennings said, buyers, sellers and agents. If it continues, he said, some real estate offices will close.”
Some? No, many. If you count all the one-man-band offices, it seems to me that the number of RE offices in Central Florida has about tripled in the past ten years.
“‘Marginal agents will retire faster,’ he predicted, and consolidation within the industry will continue.
Retire? As in, at the end of a career in real estate? That will affect some, surely, but the vast majority who will wash out are the ones who started the work in recent years and have not been able to feed themselves. A post yesterday quoted one particular broker or agent as saying that there was only one sale per agent this past year, in their area.
Anybody know what percentage of current real estate license holders work full time vs. part-timers with other income sources?
I think that the housing bubble will affect the economy as a whole. There was $600 billion last year in mortgage equity withdrawel which represents about 5% of GDP. If that goes to zero, poof goes 5% of our GDP. If the construction and mortgage industries falter, then there goes another 5% or so of GDP. A 5-10% decline in GDP would mean a depression.
there are very different estimates about the impact; some economists say it will shave 0.5-0.75% off GDP at most.
I think the big risk is that the whole train of events that produced the housing bubble starts running in reverse: not just a decline in refinancing and equity withdrawel, but also higher rates, higher risk premiums, less (RE) jobs, etc. In that case you certainly get a serious depression and it might be difficult to stop the train on its downward track once it gets rolling.
The OECD produced an interesting report two years ago about the economic effects of the slowing housing bubble in the Netherlands after 2000. The Dutch economy went into recession for some years just because the growth rate for home prices went from double-digit to single-digit. But for some other EU economies that are far less leveraged on housing, the impact of the housing bubble on GDP is much smaller.
Enjoy. Although hold your nose before you click:
“Eggonomics” from Freddie Mac
yes, weird. first thought it must be a parody of some kind.
I did get the answers right though
I would be interested to rehearse this eggonomics class in a few years when all freddiemac customers have negative equity in their homes …
Well, it’s certainly gonna put a ding in commodity-rich countries like Australia and Canada. A dead housing market eliminates much of the timber exports from Canada, China’s real estate collapse eliminates much of the need for Australian minerals.
I think the big risk is that the whole train of events that produced the housing bubble starts running in reverse
This is EXACTLY what I expect to happen. Everything is connected; you can’t simply derail one car and expect the rest of the train to continue unaffected. First one car goes, then the next, pretty soon you’ve got a complete trainwreck.
Be sure to pick up Barron’s this wknd. Big spread on glut of second homes. Good article.
Good catch: I checked online and the title is
FLIPPERS START SWIMMING
SPECIAL REPORT: After a long string of double-digit annual price increases, many second-home meccas across the country are witnessing plunging sales and burgeoning inventories of unsold homes. Why some welcome a correction.
If I had a subscription, I would post the juicy points.
Update in 2007 - FLIPPERS START DROWNING!
Here’s a corny video to go along with that — actually a toy ad:
http://www.ivc4.com/iwoot/rcshar.php
The guy’s does have a point about home prices not having crashed. (At least in this part of AZ.)
From Zillow:
Past 30 days
85205 up 3.2
MESA up 1.9
Maricopa up 2.2
AZ -0.0
U.S. up 0.7
30 days 2.4% 3.2% 1.9% 2.2% -0.0% 0.7%
Zillow is not data. It is barely entertainment.
I guess you don’t read this blog often. Median numbers are misleading. Look at sales, or at least look at quartile or quintile sales price analysis.
In Vegas, there has been a chilling in the frenzy but I do not see any real price adjustments down. It’s true in other countries who are ahead of us in the trend, that prices have not corrected dramtically.
With still real negative interest rates and easy money, we could even see nominal price increases while with inflation, real prices are down. This is the disaster scenario for me personally…and I am anxiously looking for signs of real and dramatic price decreases and not minor price adjustments. But if inflation coninues as it has, all bets are off as to whether we see nominal prices decline significantly enough for many of us to be able to afford anything outside of the crazy condos of sacramento, florida and san diego.
Simmssays…funniest cars
http://www.americaninventorspot.com
The median is not reliable. The median is not reliable.
Say it with me.
The median is not reliable!
Those buying now are getting MUCH MUCH more for their money. Prices have ALREADY DROPPED SIGNIFICANTLY… people are just SPENDING THE SAME AMOUNT.
Caveat, all areas may not have had this happen yet. But San Diego sure has and it WILL follow elsewhere.
The median is reliable. Reports the median every single time without fail. People just misuse the information presented.
I think one could compare the median price (influenced by a shift in type of properties sold and other factors) with the OFHEO prices.
If prices are really declining in the sense that buyers get far more home for the same money as feepness says, the OFHEO index should decline (but as these numbers are lagging, it will take some time before a real decline shows up there).
We’ll need to start looking at the Case-Shiller Weiss numbers when the Chicago Merc starts releasing them. Very similiar methodology to OFHEO, but they get their data at time of sale, while OFHEO numbers are based on loans sold to Fannie and Freddie, which adds a couple of extra months of lag to the process.
sorry about following up to my own post, but a couple of extra thoughts. CSW is also based only on sales, while OFHEO includes appraisal value on refis. Any else want to play over/under since the OFHEO numbers come out on Thursday? I’ll go with a small(er) positive, 4% on an annual basis. Who else wants to play?
mort_fin,
the latest I have read is that OFHEO prices for this month are expected to be 4-6% above last years prices. That would support the view that homeprices are still increasing significantly (even while prices may be declining in some high speculative areas).
I agree that there is a non-objective part in the OFHEO numbers so yes, the CSW numbers might be interesting.
The housing stock is getting younger, larger and upscale. A 4-6% rise in gross valuation barely covers those conditions. Understand (very roughly) the 300,000 replacement structures for worn out housing is $20,000 HUD hovels being torn down or torched in Detroit and Buffalo and new homes going up in Surprise, AZ for $250,000 each.
RE: “MEDIAN”
Although median prices continue to increase year over year, the numbers from the Realtors group are misleading, said David Levin, a Delray Beach real estate consultant.
Rapid price appreciations during the past five years have put homes out of reach for many middle-income consumers, as evidenced by fewer sales. That leaves the wealthy to buy expensive properties, which skews the median price upward, Levin said.
http://www.sun-sentinel.com/news/local/southflorida/sfl-zhomesbrow26may26,0,2965672.story?coll=sfla-home-headlines
yes, the same is probably happening in Europe. But it is difficult to prove it based on just the massaged realtor statistics (in many EU countries it is impossible to get the raw data for home prices).
In my country I have heard repeatedly that the major problems are with moving the cheapest properties, despite (or maybe because of?) all kinds of starter loans etc.
I have also heard quite often that buyers of very expensive properties (probably above $ 1.5M or so over here) are usually better aware of potential for appreciation in the market and that their purchases are tied primarily to stock market performance (if the stock market is booming, they buy more/bigger prestige propertise). The potential for appreciation at current EU homeprices (after probably 1000% runup for the better properties) seems unusually bad to me, but on the other side the stock market has been booming for three years now so …
The median is reliable. Reports the median every single time without fail. People just misuse the information presented.
Actually you are right as usual Robert. It’s perfectly reliable as an indicator of the median and people are just using it incorrectly or without accompanying information.
My folks live at the edge of Hillcrest right across from Park Ave.
You say home prices have ALREADY DROPPED SIGNIFICANTLY… people are just SPENDING THE SAME AMOUNT.
Where in the city of San Diego has this happened?
Not in Hillcreast. Older homes are still priced in the $500,000 range.
Look at Case Shiller real estate index for San Diego based on repeat sales.
Nov 05 250.34
Dec 05 248.55
Jan 06 247.46
Feb 06 247.89
March’s data to be released next Tuesday. Slight decline as yet but there is quite a lag to the data but it is rolling over.
Data from http://www.cme.com/housing
I think we are busy waiting for a watchpot to boil. The water is obviously heating up, and little bubbles on the bottom of the pan, but until we hit the boiling point prices will hold. We are still in prime season in most places and why should sellers cave yet? Wait till school starts, buyers move on to other things, ARMS reset, and the rain and snow start to fall. Many folks more able than I have predicted a rolling boil will begin in November. For now, we can just enjoy the spinsanity of Lareah and his ilk…
I live in North Park. Homes that are overpriced are not selling. Reduced signs abound. One house nearby has been on the market pushing a year. It is a nice house, but they are asking 1M for it.
Hell, look on zillow. It even shows price drops.
” No price drops in San Diego yet….”
well, what about the following:
“San Diego Median Home Price Drops $6K from March - April”
http://www.realestatedecline.com
.. Does anyone know how to read or what?!
People didn’t start writing negative articles because they felt it was time to write negative articles. They were having enough fun sensationalizing the rise of home prices. Once the evidence began to mount that’s when people started noticing the cracks in the system, and it’s only picked up more steam because most journalists only write about what is in front of our face right now. Anyone that can’t extrapolate the results from rising inventory, rising interest rates and a slowing number of sales doesn’t even deserve to put pen to paper.
If someone smells smoke in a house, will they wait until they SEE the fire before they put two and two together?
I see billowing smoke clouds, am finding it difficult to breathe, and the doorknob to the kitchen is hot. Is that a fire? I think not.
I’m going to stay here in the den and finish my beer, thank you.
Ben: Saw this about Gary Watts in the OC Register
PRINT ARTICLE E-MAIL ARTICLE CHANGE TYPE SIZE
Friday, May 26, 2006
Home sales slump continues, stats show
But one O.C. economist says prices appear to be holding, with double-digit appreciation rates expected for 2006
http://www.ocregister.com/ocregister/money/abox/article_1158314.php
also
PRINT ARTICLE E-MAIL ARTICLE CHANGE TYPE SIZE
Friday, May 26, 2006
O.C. incurring more debt, but paying bills
Residents owe 30% more than two years ago vs. 12.5% nationwide, as prospect of higher interest rates looms.
http://www.ocregister.com/ocregister/money/abox/article_1158537.php
He is still singing the inverted year claptrap he invented over at OCR’s blog when they interviewed him.
He had a listing on his on website that was reduced 20%.
Prices aren’t falling in Phoenix? Umm…
“While Tucson’s housing market is cooling, the market in Phoenix is in the deep freeze. KB Homes and Fulton Homes have each laid off workers in the Valley of the Sun, where the inventory of unsold homes is piling up.
Vest said housing prices in Phoenix, which was hit even harder than Tucson by last year’s speculative fever, are tumbling. He said median home prices in the capital city have fallen from a high of $350,000 to about $300,000.”
http://www.tucsoncitizen.com/daily/local/13545.php
“In the overall Phoenix market, inventory is up more than 10 times year-ago levels; prices are up 70 percent over 2004 levels; yet sales dipped only 7 percent in the first quarter of 2006. Is this evidence of a bubble bursting? I think not.”
“The dam is only 10 ft above flood stage; The price of Evian is up 70% over 2004 levels; yet releases from the dam are only 7% below last years level. Is this evidence of a dam about to burst? I think not.”
By the way, spring runoff has just begun
Look at new home sale prices and take incentives into account if you want to know where the true market prices of houses are going. Builders want to make as much money as possible and move inventory as quickly as possible. If incentives and price cuts are needed, then they’ll do it. They are not emotionally attached to the houses they are selling.
Builders are not reducing their prices because they want to be nice. It’s because they have to if they want to make money.
These articles showing up in op/ed sections of multiple papers means there is a talking point campaign coordinated by the RE industrial complex.
Convienently, OP/ED pieces don’t require facts and that is the last bastion of RE bulls in the MSM for at least a couple of years.
True, but the smarter one’s will convert at some point in order to avoid losing credibility. I honestly think that’s why Lanser reached out this blog a couple of months ago. He knows that if/when the price declines start in earnest, he needs to be able to be on right side of it.
Agreed
The other benefit that Lansner who is a self-admitted RE bear gets with his blog, is bloggers get to take the oblivious RE bull heat and relieve some of the heat off of him.
Hadn’t thought about that before but you’re probably right. He lets us fight the battles of the blog for him.
There are some absolute loons that inhabit OC and think RE is the stairway to heaven.
It is but it is Heavensgate, they had use of some nice RE.
Better stock up on the black Nikes and purple cloaks.
“Story was from a newspaper reporter who had to sell his own home because he purchased a new one, and noticed that the whole neighborhood seemed to be for sale. Because of that he decided to lower his asking price and sold in two weeks; but he still got out with a huge profit over his purchase price from a few years ago.
He mentions that most of the homes that were sitting on the market for more than a year (quite normal over here) had totally unrealistic asking prices; and they are often under contract with the same RE brokers.”
Hear, hear! Have you noticed that in many articles about the slowing real estate market, they quote people who admit they asked significantly more than their realtor suggested - and then didn’t get any offers? Why would people do that? The realtor makes a percentage of the sale price, so it benefits them to tell their client to sell for as much as they can possibly get. If they thought their client could get more, they would tell them - and then collect a higher commission. They show the client the comps from around the neighborhood. But the client thinks they know something realtor doesn’t - and then they ask so much their house doesn’t sell. Even in a red hot market, which this isn’t, if you ask too much for a house it won’t sell.