May 28, 2006

A Summer Rally In Your Housing Market?

What’s your housing market observations this weekend? Did you overhear a motivated seller? See an unattended open house? Here are some from the topics thread. From Arizona, “I was playing golf last night with a group I have know for several years. One of them told me that KB Homes laid off 45 people this week. He said that the employees were escorted off the property by uniformed police. No severence package. Queen Creek just went over 2,800 houses for sale!”

One from Florida, ” I am noticing that in Titusville/Palmbay Florida, last month they were talking about the something like 9.8% YOY price increase is still great. This month they said the something like 5% increase is still good. What is going to happen when they get to August? The median last year was around 255k and will probably be near 215K this year. How are they going to spin this one? I think this will be the reality check the housing builders, seller, and realestate agents that they really need. HOW IN THE HELL ARE THEY GOING TO PUT A POSITIVE SPIN ON THIS?”

From California, “For the past several days a Agent in Sacramento has been running a ad in the San Jose Mercury News under Income Property for sale 1-4 units”…She’s proclaming that; ‘Invest In Sacramento, #1 in Growth’….But, she went over the top today…She now has her mug shot in the ad….This is better than the mug shot of the pimp in Arizona….I think Suzanne moved to Sacramento.”

“‘We’ve been reading about bubble headlines since 2002,’ he said, but the Manhattan condo market could be at risk. ‘In Manhattan, we’re seeing a lot of construction, which is going to slow, if not turn prices down a little bit,’ Christopher Mayer, a professor of real estate at Columbia Business School said. ‘I wouldn’t be surprised to see a 5 percent drop next year.’”

“The five year boom in local housing prices appears to be finished. Numbers released Thursday by the California Association of Realtors for April 2006 shows the median home price in Riverside-San Bernardino at $394,220. That’s a drop of 2.2 percent from March’s all-time high of $403,000, but more important, it’s only an 8.7 percent increase from the median of $362,780 in April 2005.”

“That’s the first time in more than five years that year-over-year prices have risen by less than 10 percent in the Inland Empire. ‘I think we’ll still see some more year-over-year price increases, but the heyday of the housing boom is over,’ said regional economist Jack Kyser. ‘We’re in a more normal market right now, and the sellers are not in charge.’”

“New housing figures released Friday suggest that May will be Orange County’s seventh straight month with falling home sales, but prices still appear to be holding at record levels.”

“Meanwhile, real estate economist Gary Watts backed off slightly from his forecast that home prices will go up 15 percent this year but told Realtors at a Buena Park gathering that he still expects double-digit appreciation rates for all of 2006.”

“Watts called his original forecast that home prices would go up 15 percent this year ‘a little optimistic.’ But, he added, ‘It will be well over double-digit appreciation.’”

“He said he won’t know if he should consider revising his forecast until the end of July. Although real estate sales are taking their lumps so far this year, he said, ‘It’s an inverted year. There’s going to be a good second half.’”

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Comment by stanleyjohnson
2006-05-27 11:58:49
Comment by Ben Jones
2006-05-27 12:04:50

Do you know if that includes FSBO’s? In northern AZ, I estimate 4 FSBO’s for every 10 MLS listings.

Comment by Paul Cooper
2006-05-28 07:50:48

PHOENIX ADDED 1,000 new houses for sale in just this past week. Anyone who said that the summer would have slowed the glut doesn’t have a freaking clue. Now close to 48,000 homes for sale in the Phoenix area and going up 2+% a week. Phoenix is going to be ground zero of the bubble bursting. No ifs or buts about it.

Comment by Ben Jones
2006-05-27 12:03:25

With spring come and gone, it appears RL Browns’ Great Summer Rally of 2006 is a dud. The only sales I am hearing about are contingent move-ups. Not near enough to absorb inventory. Here are some of the lines from the local classifieds. All the others I’ve posted the last few week are still running, BTW.

”Priced below market’

‘Motivated seller, all offers considered’

‘Priced well below other homes in the area (Cottonwood)’

Just for kicks, I circled ‘price reduced’ and ‘owner/agent’. There are dozens on each page. Check out this add from a stuck flipper trying to rent his ‘investment.’

‘New 1,500 sq ft home to rent in Cottonwood. Minimum six months. No smoking, $3,000 deposit. Call owner’

The area code is out of state. In the same paper several new homes for rent in the same sub-division accept pets. This guy doesn’t even mention how much he wants for rent, and thinks he can get $3k for a deposit?

Comment by Mo Money
2006-05-27 12:36:37

$3000.00 Deposit is a clear deal killer. The guy is obviously a newbie trying to manage a property remotely, sure failure in the cards for this poor sap. How is he going to show the property ? No smoking ? Look Pal, if I’m paying for the place I’ll damn well smoke if I please.

Comment by mrincomestream
2006-05-27 13:02:51

Yea, you can tell he’s taking his Landlord 101 course from Borders and not from many years of getting his teeth kicked in from tenants.

Comment by Mr Fester
2006-05-27 12:39:28

Although my personal experience is that many landlords are lower than mole’s bellies, I suspect these absentee flippers will have a steep learning curve to even rise to that level of incompetence. We’ll see…

Comment by Ted
2006-05-28 18:57:58

There’s a rally in my neighborhood every weekend!! The realtors all rally at the street corners and rush to put up their open house signs before all the rest can. They aren’t making any more street corners, and the realtors have to plant the flags now or be knocked off the corner forever. There seems to be some code of ethics that realtors won’t block another realtors signage.

Comment by Sunsetbeachguy
2006-05-29 05:57:11

You know that there is a pretty strict pecking order for panhandlers and the use of corners.

I could see this becoming a trend for realtors as well.

Comment by Harold Bridges
2006-05-27 12:06:24

>> Christopher Mayer, a professor of real estate at Columbia Business School said. ‘I wouldn’t be surprised to see a 5 percent drop next year.’”

What is wrong with this bozo? According to reports prepared by economist Gregory Heym, the median price for a Manhattan apartment peaked in June, 2005 at $831,000 and dropped to $722,000 in April, 2006, a price drop of 13%. Those monthly reports on Manhattan real estate are available here:

I am dumbfounded to hear Mayer and others like him predict possible drops of 5%. IT HAS ALREADY HAPPENED!

But you won’t read about it in the NY Times apparently.

Comment by Footie
2006-05-27 12:33:22

Christopher Mayer, a professor of real estate at Columbia Business School said. ‘I wouldn’t be surprised to see a 5 percent drop next year.’”

Does somebody actually pay this guy?

What is the salary scale for twits?

Comment by Gekko
2006-05-27 13:05:35

“Does somebody actually pay this guy?”

yeah. probably NAR or NAHB.

Comment by bubblebuster
2006-05-29 01:15:41

He never said that that prices will not drop more than 5%. HE is probably saying that the prices will drop way below 5% :-)

Comment by Chip
2006-05-27 12:22:38

Whenever I see the price drop numbers I have to remember that a 1% drop is a lot more than a 1% increase — a 33% drop is what erases a 50% increase.

Comment by SidneyPrice
2006-05-27 12:45:57

better do the math on this one! A 1% rise and a 1% drop are nearly equivalent, and the difference gets smaller as the rises and drops shrink to zero. It is the “limits” in calculus. That much said, the rise/drop asymmetry can be substantial for larger values, as you point out.

Comment by Gekko
2006-05-27 13:08:07

“Arithmetic on the way down and geometric on the way up.” - Say you had $10,000 in a fund at the peak of the bull market and the fund lost 50 percent during the bear market. That left you with $5,000. Then, in the past year, your fund gained 50 percent. So now you have $7,500. In order to recoup your original $10,000 the fund would have had to gain 100 percent.

Comment by SidneyPrice
2006-05-27 15:03:22

yes, but Mr. Chip had hinted that the same magnitude of asymmetry would apply to 1% change in price. If your home lost 1% in value in March, it would need to rise 1.01% in value during April to return to its starting value.

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Comment by Sunsetbeachguy
2006-05-27 17:18:18

A 50% decrease wipes out a 100% increase.

It is a two-fer.

Many RE bulls don’t get that in OC.

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Comment by nhz
2006-05-29 03:05:03

yes, interesting subject.

The RE analist from one of the big banks in Netherlands (ABNAMRO, heavily leveraged on RE like most Dutch banks) argues that for every 1% rate increase real estate prices will cecline 2-3%. But don’t worry, there are many other factors that will keep pushing prices up in the Netherlands like real wage growth (it’s just as spectacular as in the US!!), a shortage of housing (even now that more people are leaving than entering the country still a favourite argument), investment demand (got that?) etc.

In the real bubble times, a 1% decrease in rates pushed homeprices up by at least 20-30%. Our current rates are around 4.25% (30-year fixed) and 2.75% (2-year fixed). For Dutch homeowners that is actually 2.1% and 1.4% because of the standard 50% tax deduction.

My math says that a 1% increase in Dutch rates will increase borrowing cost by 25% and as everybody is leveraged to the max, that must translate into at least 25% lower home prices. Obviously the banks are working with entirely different math than the type I learned in college…

Comment by Chip
2006-05-27 15:20:04

Here’s my math: If a $100,000 house gains 50% in value, it goes to $150,000. If you cut 33% (1/3) of that, you’ve cut $50,000 (all of the increase) to get back to $100,000.

Comment by We Rent!
2006-05-28 22:10:07

Everyone is right - but Sidney is MORE right. He understands what others are saying, but others do not understand what HE is saying. Read his posts again.

Chip first wrote: “…I have to remember that a 1% drop is a lot more than a 1% increase…”

The mistake here was the phrase “A LOT MORE.”

Now go read the first reply, including the part where he AGREES with the gist of the point.

Comment by landedeal2
2006-05-27 12:31:23

“Meanwhile, real estate economist Gary Watts backed off slightly from his forecast that home prices will go up 15 percent this year but told Realtors at a Buena Park gathering that he still expects double-digit appreciation rates for all of 2006.”
I dont think so Gary,

Comment by Mo Money
2006-05-27 12:39:01

wow, he had the balls to say that when most of the audience hasn’t had a sale this year ? I hope he has a teflon suit because Tar & Feathers are in his future.

Comment by Dont know nothing about buyin no house
2006-05-27 13:11:16 forgot the pole

Comment by arlingtonva
2006-05-27 12:50:31

real estate economist Gary Watts [said] he still expects double-digit appreciation rates for all of 2006

With rosy statements like that from the RE industry we will continue to see sellers not wanting to lower their price, resulting in less sales and less commissions for RE agents.

You would think statements like this would start to piss off RE agents.

Comment by Bluzer
2006-05-27 21:53:21

They’ll do this upto a point. After that they’ll start working on the sellers - asking them to lower their prices - if they want to sell during the ongoing crash. This realtor lead crash will be the real thing. The one we’ve been waiting for.

Comment by BubbleAnalyst
2006-05-27 13:16:55

From the Gary Watts Fortune Magazine article (2/06): “always follow the inventory” and “Watts’s favorite indicator is housing inventory.”

Watts used to follow the inventory until it started going up. Now he has local real OC estate agents parroting his baseless “inverted year” theory in a last gasp effort to “spin” a few more sales out of the housing market.

He has already “revised” his 2006 price appreciation “forecast” once this year, and he may revise it again after the end of July! Maybe he will revise his 2006 forecast again in January 2007. His forecasts were largely backwards looking to being with, but this is ridiculous. Of course, we will hear for years about how he was right and everyone was wrong regarding real estate in 2006.

How anyone takes this guy seriously is beyond me.

Comment by Sunsetbeachguy
2006-05-27 17:20:08

Yep, you tore him a new one at OCR with the How to Forecast RE like a pro posting.

That should be top posted anytime he shows his mug.

Comment by BubbleAnalyst
2006-05-27 20:51:59

Thanks Sunsetbeachguy. I enjoy your posts on the Lanser blog. Thanks for keeping it lively. You clearly have more patience than I do. :-/

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Comment by Sunsetbeachguy
2006-05-28 10:26:08

There are some real loons on that blog, and Jon has to edit out some of my angrier posts.

I eventually calm down and try to post facts.

Facts are stubborn and those things that cannot go on forever don’t it really is about that simple.

Comment by Sunsetbeachguy
2006-05-28 18:33:55

For everyone elses fun:

Here is THE BEST counter to Gary Watts and any other RE forecasting guru. By the very modest BubbleAnalyst.

FUN WITH NUMBERS! How to forecast the housing market like a pro.
The real estate industry loves to predict home price appreciation (8-11% for 2006 cited in current OC Register story) and they pat themselves on the back for their Kreskin-like abilities. But predicting home appreciation is much like predicting where a cruise ship will be in an hour. If you stand on the bow and point straight ahead, you will be right most of the time.
Here’s a Step-by-step guide on how to forecast the housing market like a true real estate analyst:
Step 1: Look at yearly appreciation for the past three months as reported by DataQuick. Use this as your prediction for home sale appreciation over the next 12 months. There is no Step 2. The chart below shows how these predictions compare to Gary Watts over the past 5 years:
3 Mo. Ave. Watts Actual
As you can see, the 3 month average beat Mr. Watts 2 of the past 4 years and it looks like 2006 may provide another forecasting victory. I am clearly a FORECASTING GENIUS.
To improve my forecasts I’ve considered adding inventory, sales and other data to the analysis. But why bother? I am not in the real estate industry and have no incentive to create a better MARKETING STATISTIC.
The problem with real estate forecasts is that they tell us very little about what’s going to happen to real estate prices in the upcoming year because they are based on old data—a comparison of the median price from one year to the median price of the next year. Here’s the problem:
The market price of homes at the start of 2006 was already 5.75% higher than the 2005 median—compare $585k ave. monthly median for 2005 (per the OC Register) to Dec. 2005 median price of $621k per DataQuick. You can use other numbers if you wish, but the results are the same—the forecasters are playing with a stacked deck. Much of the predicted home appreciation is already built into the market. For example, a forecast of 8% home appreciation is really a forecast of 2.25% home appreciation if based on prices at the beginning of the year.
To illustrate the absurdity of real estate forecasts and press releases consider a scenario where prices FALL from the Dec. 2005 median of $621k to a Dec. 2006 median of $608k, with a 2006 median price of $616k. Who would be right, those who predicted a 2% drop in home prices for 2006 or those who predicted an 5% rise in home prices? I would expect to see the following reports from real estate professionals in January 2007:
Of course, the homebuyer who purchased in Dec. 2005 and sold in Dec. 2006 would have lost 2%. But hey, people are bad at math. If we repeatedly tell them they gained 5% they will believe it.
Posted by: BubbleAnalyst at March 15, 2006 11:35 AM

Comment by lmg
2006-05-27 19:32:07

I think you may have misread his “inverted year” theory.

He was actually referring to his “inverted navel” theory, which obviously requires considerable contemplation.

Comment by Sunsetbeachguy
2006-05-28 13:46:22

I think that Gary Watts is in the MSU school of RE forecasting.

What is MSU?

Make Sh!t UP

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Comment by Ted
2006-05-28 17:27:08

That sounds related to CRS, something invecting most RE specuvestors.

Comment by Robert Coté
2006-05-27 13:19:04

17% for Ventura County “is in the bag.” Infuriating part is next year he’ll be paid by the same groups to explain what went wrong.

Comment by Langley BC
2006-05-27 12:43:48

Not sure if you guys are interested in what is going on in Vancouver Canada, but here it goes. I was talking to a guy who just bought a house in August 05. I asked him if he is worried about depreciation, he said “absolutely not” as his house has already appreciated by 100K since he bought it. Not only has he bought a new house, but he did not sell his old house. I asked him if he would buy another house, to which he told me he plans to actually sell his old house and buy an investment property further out of town. When I asked him why he is not worried about prices dropping, he told me that he subscribes to a bunch of realtor blogs/boards and according to his sources, with the amount of immigration and etc, the current building orgy cannot keep up to demand.

The pace of building here is astounding, suburbs are springing up all over the place. Houses are being built by the hundreds, entire communities complete with strip malls. I think Vancouver Canada is about a year or two behind the US.

I am curious what negative information relating to the US market will do to the building/investing/buying binge here.

Comment by mousebender
2006-05-27 13:12:44


Thanks for the info. Vancouver seems to be bubble central for Canada, and just a little behind California’s speculation wave (perhaps in sync with Seattle?).

Comment by waaahoo
2006-05-27 14:06:12

If your friend is bullish on real estate he should be reading this site. It more important to read views that conflict with your beliefs than it is to read reinforcing comments.

Comment by Joe
2006-05-27 19:57:23

Yeah, and how many of the true bubble believers that post on this blog read other conflicting view blogs.

Comment by Langley BC
2006-05-27 21:51:25

Excellent observation. I think I will exchange links with him. - Thanks!

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Comment by arroyogrande
2006-05-28 22:46:18

Probably a lot of us…I know I do. And I am definitely a “true believer”.

(OK, to be truthful, the reason I still read many of the pro-RE blogs is for the humor value…)

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Comment by SeattleMoose
2006-05-28 01:23:38

Seattle has been a “destination” for CA equity refugees. There was a big wave in late summer/fall of 05. Check of plates in several high end apartment complexes in this time frame revealed where the influx was coming from. It was rampant.

The NW is one of the last dominos waiting to fall. We are anywhere from 6 months to a year behind whatever happens in CA. BC probably are too.

Flippers and equity locusts will be at the top of the list when it comes time to assign blame after the collapse.

Comment by M.B.A.
2006-05-29 04:01:29

It started after the Northridge quake (at least in qty.) I recall then SEA people saying “GO BACK!!!” THey should have put up road barriers ! ;)

btw, they are going to build a massive UTOPIA STUDIOS theme park, movie studios, etc. in bucolic Preston, CT.

THe lunacy is spreading. My prediction on that: bust. Why? Over the next 10-20 years profits will be fairly non-existant in that industry due to the crap and fodder they put out + piracy of their movies.

You just cannot escape the Brangelina mentality planted in this society

Comment by tauceti96
2006-05-28 17:09:36

I have cousins out in Kelowna. There is a mad building binge going on out in the Okanagan and I am worried about what will happen when it grinds to a halt. There are deep real estate ties in their family, thankfully some of it goes back long before the Great Fire of 2002 (?) when half the town burned to the ground and the real estate market went into overdrive. Unfortunately I’m thinking there is a lot of speculation going on there as well at this point since the 250+ houses that were destroyed have long since been rebuilt.

Comment by Footie
2006-05-27 13:02:06

Vogels statement seems to be getting close to reality.

Comment by sigalarm
2006-05-27 13:16:17

Two items of note from North County San Diego.

1 – I noticed in Saturday’s real estate section of the newspaper that some home builders are now offering a “trade in” for your existing home. That is they will give you the full appraisal price for your house towards the purchase of one of their McMansions. Kind of a cleaver way to keep the “sell through” going.

2 – Overheard in a barber shop; some local guy who runs an illegal immigrant labor gang construction crew saying to the person cutting his hair how he owns a spread of houses and he is about to pocket a cool $700K. The greed is still going strong here. The barber, a nice Korean Lady, tells him that he is going to have big trouble because no one is buying houses any more.

Comment by Gekko
2006-05-27 13:27:30

Happy Ending?

Comment by Arwen U.
2006-05-27 15:54:01

I asked my hairdresser how her boyfriend’s RE job was going. She said “slow, but he’s getting into the mortgage business with a friend”.

Comment by Ted
2006-05-27 13:34:14

My brother was shopping for a home in a new Lennar development during the week, they told them to come back by appointment as there were no represenatatives available until the weekend. Not that they were booked, but that they only worked on weekends now.

I have no idea if that’s normal or not. However, it seem rather strange.

Comment by CA renter
2006-05-28 00:51:33

Very interesting. Where was this?

BTW, no, it’s not normal. :)

Comment by Ted
2006-05-28 17:28:06


Comment by Neil
2006-05-27 13:39:45


You have a bright barber. ;)

My girlfriend and I just went “house hunting” as part of our project to collect data for our purchase in 2+ years (again, we think the homes that sell now will be the bargains then). What did we find?

1. Many more people looking. So its quite possible the south bay area of Los Angeles will have a summer boom.

2. Too many people who are itchin’ to get into real estate so that they can stop working. I can’t help but notice how many coworkers point at me and I’ve overheard them say “Yea, but this or that ‘dumb yuppie’ will eventually have to buy and we’ll make a fortune off of them. While they’re figuring out how to pay for the house, we’ll retire on Lake such and such.” As sad as it might sound, I think a lot of FB’s are about to empty their piggy banks a la the NASDAQ in ‘01 and ‘02. Now the question is… Are seeing the real estate version of ‘01 or ‘02??? (Do we have another bounce ahead of us in other words.)

3. Most of the homes on the market are flips or new construction. First, I have to admit I love the fact so many homes are now 2 to 4 “courtyard homes.” Ok, not my ideal… but the fact is this area needed more housing so that housing is coming on the market. :) :) :) But half the homes were

Comment by sigalarm
2006-05-27 13:56:35

Wow, thanks for reminding me. This guy in the barber chair started is brag by proclaiming he was retiring this year. Poor fellow was probably in his late 30s. I wish him luck.

Comment by chicote
2006-05-27 17:56:31

I wish him luck.


Comment by Max
2006-05-27 19:42:21

Wow, you have real azzhole coworkers, my friend. I’d slash their tires if I heard something like that.

Comment by Neil
2006-05-27 22:58:17

I did a little more research and found 100% of the homes were looked at today were flips (definition: resale within 24 months). Wow, things are out of hand in my opinion here in the south bay of LA.

Oh, my coworkers are ok. Its a very varied group with multiple companies working on one project. Its just the normal friction that any workplace with large differences in education has. Get everyone around the BBQ with good meat on the grill and alls well. :) But they’re getting greedy and for some reason think that enough other people would be willing to pay 150% of today’s prices for a house… I can’t believe they’re gutting their retirement to speculate in homes. I’ve given up suggesting they might want to research a bit more before such a large “illiquid investment.” Cest la Vie.

As I’ve said before, I expect one last spectacular run up before the end this fall.


Comment by Kathy
2006-05-27 13:42:06

Completely OT, but after reading and posting here for almost 1 year, I know you are a helpful group.

Can anyone tell me how much charges to print fund analyst reports? It doesn’t say in their membership agreement, and their customer service is closed.

Thanks in advance. I promise my next posts will be housing bubble related. ;-)

Comment by Ted
2006-05-28 17:30:15

I think you can get one free if get a referral from some financial websites.

Comment by Portland Mainer
2006-05-27 13:55:48

A report on April sales just out in Maine: “he industry’s data arm said that 1,049 homes sold statewide in April, a decrease of two homes from the same month in 2005. The median sales price - meaning half the homes sold for more and half for less - was $190,000, up 1.6 percent from a year earlier.”

Inventory in Zip 04103 (Portland) continues to drop and is down about 16% since January.

1/16/06 232
1/30/06 218
2/7/06 220
2/16/06 228
2/25/06 226
3/8/06 211
3/22/06 193
3/29/06 189
4/7/06 181
4/14/06 187
4/23/06 202
5/18/06 198
5/26/06 194

A 4,200 square foot home in our golf course development was listed a week ago for $775,000 and is already under contract. The lot it was built on in 2001 sold for $98,000 in 2000. Another house on the same street has been on the market for seven weeks at $725,000. This one is on an acre and a half, is 3,600 square feet , is on a lot that went for $85,000 in 1999 and was initially sold for $410,000 late that year. Same street, different houses and totally different days on the market.

Overall, here in the Portland area, it’s gotten a tad slower but it’s still boom times as people “from away” move in from far more pricy locales such as Boston, NY, NJ and California.

In the affluent areas you’re hard pressed to find a native Mainer. Yet these neighborhoods abound with people who used to live on Manhattan’s upper east side or in NY’s suburbs.

Comment by Gekko
2006-05-27 14:05:36

yes, we all know that Maine is “different”.

Comment by SidneyPrice
2006-05-27 15:13:34

Well, yes! Maine is in a different part of the cycle, and thee boundary conditions of its RE market are different. It is fascinating how the different markets interact. Because Portland is such a small market, it can maintain a robust RE appreciation from equity nomads. In a much larger market like Phoenix, the cash from equity nomads has lost its power now. However, the equity nomad cash could stop coming in or even withdraw in the rest of the year. No one can be sure of the timing, even if they are sure of the outcome.

Comment by xcnordic
2006-05-27 17:45:09

Kennebec valley ME about an hour north of Portland is finally slowing, though desirable areas are holding up. In the last month I have noticed not much is selling and prices are flat compared to last year. Stand off, no panic selling but no bidding wars either.

This things take time, I still expect Maine values to decline over the next 2-3 years even in Portland.

Comment by Polestar
2006-05-27 23:46:43

Weird. I keep checking for ME and total listings have gone up from ~ 3950 a few weeks ago to 4330. Clicking on Portland only it’s 563 when several weeks ago it was ~ 533. I wonder what is up?

Comment by Portland Mainer
2006-05-28 02:54:53

Polestar - I can’t duplicate your numbers. When I put in just Maine, it tells me “Please enter a city and state or Zip”. What exactly are you putting in to get the results you reported.

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Comment by Polestar
2006-05-28 14:22:14

This page is for the whole state, and I usually click on Portland only:

Comment by Polestar
2006-05-28 14:24:09

Sorry, I meant “Coastal 2″ for this page….

Comment by Polestar
2006-05-28 14:33:34

Part III, sorry I drew the short straw for working this w/e…… Those numbers include condos, SFH, land and Multi’s- that’s probably the bulk of the discrepancy. Since the numbers have seemed to jump up, I’ve also checked some local Portland realtor sites and it does appear they have more listings then a few weeks ago, so I thought it was consistent with the numbers spike was showing. Interesting note, it used to be alot of the broker sites listed the address and/or the MLS number, which of course you could then check on the city web sites what was paid for the property and when. Now I’m finding many of them have stopped doing that. I’m going up to Portland next w/e so I’ll ask my realtor friend about it. I’m sure it is just some kind of strategy, not that it will work, whatever they are trying.

Sorry for the scattered response P.M. ……

Comment by Chester from Westchester
2006-05-27 14:09:09

In northern Westchester, inventory of single family homes has more than doubled since the first of the year. A lot of people just seem to want to take the money and run - either flocking to less expensive parts of the country, downsizing or both. There’s no summer rally here. None out in the Hamptons either. There the rental market is strong because people are afraid to buy given the Hampton’s recent price declines. I’m told that some of the smart money is quietly getting out of the Hamptons as it’s been swarmed upon by wannabees. It will be interesting to see where the smart money starts turning up.

Comment by DannyHSDad
2006-05-27 14:18:00

meanwhile, Austin, TX:

The Central Texas homes market, however, is bucking the national trend. Figures released by the Austin Board of Realtors on Tuesday showed that sales of existing homes jumped 12 percent in April compared with a year earlier. The median home price rose 8 percent.

At the end of the first quarter, Central Texas home builders were escalating construction on new homes but barely keeping up with demand.

Comment by DannyHSDad
2006-05-27 14:22:43

Sorry, this is better link:
[free reg required.]

Real estate agents say that multiple offers are on the rise and that people are asking higher prices — and getting them.

“I think boom times are here again,” said Bill Stanberry, owner and CEO of Stanberry & Associates, an Austin-based residential and commercial real estate firm.

Comment by txchick57
2006-05-28 16:12:05

Bullshit. Check the foreclosures. The people buying there are the same idiots that bought in Phoenix last summer.

Comment by mad_tiger
2006-05-27 14:36:39

The San Francisco Peninsula is different. It is Utopia. No bubble here. But at least the overpriced crap which constitutes about three-quarters of all listings isn’t moving either.

Comment by The Learning Man
2006-05-27 15:07:31

Don’t let Gary Watts fool you. He is biggest ‘rah rah’ man for the real estate industry. They cut him checks so he go out and hype this bullcrap real estate market. Prices are not going to go up. They will drop. Unless these people want to hang on to their overpriced houses. I say, Go ahead and hang on to them. As Jim Kramaer says, “Bulls make money, Bears make money, Pigs get slaughtered”.

Comment by Melody
2006-05-27 15:46:08

He’s a fat prick. His reputation will soon be tainted. No Gary, you can’t change your mind.

Comment by skipintro
2006-05-27 16:21:52

I think folks looking for large declines here in Cali will be disappointed. Bottom line: Three years from now, I think the median home price in Cali will be higher than it is today.

Comment by Chester from Westchester
2006-05-27 17:06:55

It will definitely be higher one of these days. But it may not be higher in real terms. As long as you are buying a house for the long term and not getting in over your head, you’ll likely not be terribly hurt in good areas as things will go up after they go down. Sure you might kick yourself if you buy and then prices drop 20%, but in a few years you may get at least even and your income might be so much higher that the mortgage will feel small.

Comment by Bubble Butt
2006-05-27 21:27:48

“your income might be so much higher that the mortgage will feel small”

What fucking planet are you on?

Comment by Chester from Westchester
2006-05-28 12:06:27

Bubble Butt -

Earth. When we bought our first house and my best earning years were ahead of me, in very short order when my income had doubled and the fixed mortgage became a cinch to pay.

What planet are you on - Loser-eum?

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Comment by brianb
2006-05-29 06:10:37

That’s the logic that gets people in over their heads. They can barely afford interest on their salary and plan on it going up. What if it doesn’t?

You probably bought at 4x your income, now people with the same starting income for the same starting house have to pay 8x. And in the future they’ll pay even more, right? With what?

Next mortgage product should be full negative amortization. You pay no principal, no interest. They mortgage company should throw in real estate taxes and maintenance too. They should pay YOU money to live there. Then by definition everyone would be able to afford every house. And real estate prices would only go up, to infinitiy.

Comment by Sunsetbeachguy
2006-05-27 17:24:09

More bears capitulating.

All that has to happen for So Cal RE to bust is to sit back and let people try to survive the turning of the ARM reset screws.

Oh yeah losing 43% of the jobs created since 2001 will help the process out too.

Comment by ken best
2006-05-27 19:33:27

Gary Watt says it’s 2 months from now, and Suzanne researched this.

Comment by Max
2006-05-27 19:55:00

If they introduce 1% APR 100-year interest only mortgage. Otherwise, I don’t see how people can carry yet more debt.

Comment by tj & the bear
2006-05-27 20:23:07

Nominal or inflation-adjusted?

Comment by awaiting bubble rubble
2006-05-27 20:33:37

I am awaiting large declines in Cali, not necessarily as large as the declines that followed the much smaller bubbles in 1980 and 1989, but large declines. If the median home price in Cali is higher three years from now than today, rents and incomes will have more than doubled and we will be in a hyperinflationary stage ala Germany in 1932. If that happens, the cost of houses won’t be on most people’s minds but finding places to bury their jewelry might.

Comment by Melody
2006-05-27 23:05:40

I see the largest declines ever in history!!! What are you thinking? The loose lending has caused this. Get a clue and wake up America.

Comment by tj & the bear
2006-05-27 23:50:17

Go, Melody, Go!

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Comment by Joe
2006-05-28 05:33:05

Rah Rah Rah. Go Melody go.

If you’re absolutely 100% sure of your position, it is helpful to go and find someone with an opposite view of yours. Else you’re the same as the “real estate never goes down’ crowd but on the other side.

Comment by Sunsetbeachguy
2006-05-28 16:22:17

Got any evidence to the contrary?

Comment by We Rent!
2006-05-28 22:23:08

San Diego is toast. I am 100% sure of my position. The only question is, can the burnt part be scraped off enough so that one can recognize the original condition of the bread at some point in the future?

BTW, what is the “other side” - real estate always goes up?

Comment by Sunsetbeachguy
2006-05-28 10:29:48

My standing challenge to any hyperinflationist is this:

Governments and Quasi-Governments (like the Fed) are in one business and one business only. Self-perpetuation.

Please name one government that hyperinflated their currency and survived.

Comment by Sunsetbeachguy
2006-05-28 17:55:03

PS no one has yet answered this.

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Comment by Bubble Butt
2006-05-27 21:30:42

I think the median home price in Cali will be higher than it is today.

That is a really stupid comment. What makes you think that? Do you have actual data that supports this, or did your realtor tell you to say that?

Comment by Only-A-Matter-Of-Time
2006-05-28 00:29:33

I think folks looking for large declines here in Cali will be disappointed. Bottom line: Three years from now, I think the median home price in Cali will be higher than it is today.

I do not know how old you are, however, you obviously do not know what happened in the late eighties and early ninties.

If properties did not drop by fifty percent, they dropped by even more.
We too had seen no end=until it hit.
I know the defense industry left-however, today, the jobs here do not pay enough to justify the high prices.
Bank of American did a calculation that in order to live comfortably on a hundred thousand dollar income, the maximum amount of home you can purchase would be three hundred thousand dollars.
I know a lot of people who make over one hundred thousand dollars a year, however, they too say that this is rediculous.

Comment by skipintro
2006-05-28 15:11:07

Actually, I hope you’re right. I’m not trying to tout real estate; I think things are crazy. But a few comments.

Based upon projected population increases by the State Department of Finance, Cali will need, on average, 200 to 250k new housing units per year over the next 15 years. We’re not even building that now.

The mania is still so strong. Anecdotally, I’ll note that a distant relative has just purchased an old SFR in a not-so-spiffy part of the East Bay for 500K. That’s about 8 times the gross household income of my relative and his wife, who are in their late twenties. They are happy as clams with the purchase and think they are now on their way to financial security.

About financing: What makes people think things will tighten up as to underwriting? Very little has changed in this regard. And it’s at least fifty-fifty that interest rates have peaked and may soon be on their way down, not up.

Comment by brianb
2006-05-29 06:26:42

That’s housing for 750K people per year. The population of CA is declining except for illegal immigrants.

So are illegals going to be paying 800K for 3br houses? Illegals will keep the prices high? With what? They make $6 an hour.

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Comment by Mr Fester
2006-05-29 08:55:31

Whoa! Skipintro, you kicked the hornet’s nest with that post. I think the fact that anyone thinks prices can keep going up when they are so detached with reality shows how widespread that mania is. Realtors and flippers trolling for greater fools, prostitutes like Lareah and Watts spinning for them, and your average joe thinking that I must get in NOW! In California, a particularly reliable kind of hubris also plays in (this place is way cooler than…WI, NE, GA, TX,etc…so it will alway be worth more)

I would guess your 20 something relatives have just the right mixture of greed and naivete to help fuel it a bit longer, but I am afraid gravity applies in the golden state too.

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Comment by bubblewatcher
2006-05-29 11:24:35

Based upon projected population increases by the State Department of Finance, Cali will need, on average, 200 to 250k new housing units per year over the next 15 years. We’re not even building that now.

What these new arrivals need is affordable housing, most likely rentals. We’re certainly not building that, either. In fact, we’re tearing down lots and lots of old, affordable rental buildings to put up $800K yuppie kennels with granite countertops. To my knowledge, nobody moves to CA to pay that kind of money for that kind of property.

This is a buying frenzy, pure and simple at this point. Even rising mortgage rates won’t bring it down, because it’s a self-sustaining, free-money free for all. What’s ultimately going to bring down prices is the inability of anyone to afford to buy anything. You’re beginning to see that now, and it’s only going to get worse.

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Comment by SeattleMoose
2006-05-28 01:31:30

Then put your money where your mouth is and buy now…RE only goes up.

Comment by surffroggy
2006-05-28 16:19:40

Your crazy dude! No median price drops in 3 years in California? the median price in California already dropped from Aprol to May. I can’t beleive Ben hasn’t posted it yet put there are news links about it at
If prices are declining today then in 3 years we will get between 20 - 30% lower medians

Comment by Mr Fester
2006-05-28 20:33:26


I can appreciate a contrarian view, but return to earth. Home prices in nearly all of California are obscene, and if so, prices on the coast were set by Caligula himself. California is out of reach of most of it’s residents and three years won’t change that. And it is simply not that much better than the rest of the universe.

Comment by robin
2006-05-29 00:54:38

The number of people living in a SoCal home could allow a further rise in prices and a further decrease in quality of life in a given neighborhood.

It’s harder every year to park in front of my own damn house. Is this SoCal’s future?

Comment by CA renter
2006-05-29 01:15:30

Unfortunately, yes. :(

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Comment by Flic
2006-05-27 16:44:19

Sarasota/Bradenton median prices down 15% from August ‘05 with record high inventory and no buyers. Oh, and hurricane season starts in 5 days….

Comment by Karen
2006-05-27 18:25:08

The Northern Nevada MLS is up over 9,000, It was around 6,500 last summer, and was slowly climing, now it’s climing fast.

Comment by tom stone
2006-05-27 19:53:29

gary watts has a “repeal ohms law”bumpersticker,and means it.i have a friend here who has owned a couple income properties for years,i’ve been telling him it’s a bubble for more than a year,and would tank,3 weeks ago he calls me,tells me a house on his block sells for 823k,55 yrs old 3br 2 ba decent shape….i asked what it would rent for,he says 1850/mo….sooo dq news comes out yoy 29% decline for median in our town…so i call him with the news…, talk about upset”you stuck the knife in and twisted it”etc “never talk to me about re again” i’m in real estate…i have been telling people to get out or cya for near 2 years…people who have been sneering at me for a long time just no longer want to talk about it…oh our inventory doulbled in a month lots of reduced prices,fewer sales by half yoy

Comment by jm
2006-05-27 20:26:15

I’ve recently started doing some very small-scale, semi-manual data mining on my Chicago suburban community. Two zip codes, total pop. about 75,000, about 30,000 homes (2000 Census by-zip-code figures). Comparing web realty site data for May 27 against that for May 2, single-family home listings up from 330 to 362, 79 asking price reductions averaging 2.81% ($17,400), 54 homes removed from listings (sold?), 86 added, 22 relisted (?) (same address, different MLS number).

If the 54 delistings represent about one month’s sales, then the inventory is above six months, and grew by about half a month’s worth through the 25-day period. Note that the 79 price reductions on the 276 units listed on May 2 and still listed on May 27 comes to more than 28% having been reduced.

In addition, there are 609 condos/townhomes on the market, also a significant rise from May 2 (I’m not tracking the prices on these).

Comment by The Learning Man
2006-05-27 21:06:49

Yeah, your right. Southern Cali market is going to up 20% in 2006 and 25% in 2007. The average 3 bedroom, 1500sq ft room in Garden Grove will sell for $1.1M by 2008. After Bush signs the amnesty bill, all the illegals (who are now going to have their fresh brand spanking new green cards), foreigners from Taiwan, China and other Asian countries and rich folk will start buying up property here. Everything will be alright. Everything will be great. No need to worry. We are bust prone.

Comment by tj & the bear
2006-05-27 23:51:36

We are bust prone.

Freudian slip? :)

Comment by robin
2006-05-28 21:20:06

Do you have any proof of that?

Comment by Sunsetbeachguy
2006-05-28 21:25:31

Yeah, look at the LA chart from OFHEO and compare that to WI, IA, NE etc.

California is a volatile and bust prone RE market.

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Comment by Mozo Maz
2006-05-28 13:51:39

28210 zip code in Charlotte — prices still rising a bit with inventory where it was last year. This is near a light rail system that the city is building that will complete in 2007. So external factors may be driving the market up. I don’t watch other parts of the city, so I’m not willing to make observations of those market conditions.

Comment by tommy_trojan
2006-05-28 14:12:10

RE agents/brokers should not be allowed to “pump-and-dump” their RE holdings with impunity. They should be bound to the same restrictions as stock brokers/bankers do. Chaps like David Lareah should be required to make disclosure of their RE holdings every time they blitz the media with their distorted “expert” comments. RE agents/brokers/speculators have been getting away with this predatory vocation for a long time.

The hoarding of houses by leveraged RE agents/speculators has forced many first-time home buyers to pay a painfully stiff entry fee to acquire their American dream. But that how unregulated free market works, but since tax payers will likely be called upon to clean up the mess, there has to be some regulatory stature to restrain the opportunistic predators out there. But as I mention before on this board, the market gives and the market takes with great fury. That hoarding of houses has become a titanic load of angst. RE agents/speculators are suffocating on the immense inventory of houses for sale on the market. They are crowding at the exit. The fear of financial carnage is there, but it has not been confirmed by national/public price statistic yet. For now, this suffocating crowd is just amassing at the exit. It can turn into a stampede for the exit over night as spring fades into the still heat of the summer and into the chilly air of autumn. Many of them will be wiped out. The smart RE investors I know, all of them got out 2-3 years early. But that’s the nature of manias. If you got out at the top, you are the fortunate few.

Comment by Sunsetbeachguy
2006-05-28 16:04:03


That is the angle that the Attorney Generals should take the RE industrial complex to task on.

“Flipping” that witholds inventory is market manipulation and done by RE agents.

Duplicitous and wrong.

Comment by Ted
2006-05-28 17:31:46

It ain’t unregulated. It is in fact stacked with tons of incentives from congress, tax breaks, GSEs, LLC loopholes, etc. It’s not a freemarket. It’s a crook’s market sponsored by the biggest crooks in history: politicians.

Comment by pvb
2006-05-28 18:15:16

“I think folks looking for large declines here in Cali will be disappointed. Bottom line: Three years from now, I think the median home price in Cali will be higher than it is today.”

I wouldn’t dismiss Skipintro’s comment entirely for several reasons.

1. We’re in uncharted territory with respect to the effect of increasingly globalized financial markets on liquidity and long term interest rates. To wit, bond prices have been equilibrating even in the face of elevated interest rates and weakening demand from FCBs (China and Japan). Perhaps it’s the calm before the storm, but I wouldn’t bet on it (yet).

2. The California market is pretty heterogenous. The hinterlands like those in the Central Valley will get hammered, simply because affordability is low and there’s no redeeming qualities of the place. I wouldn;t mind being broke and living in a bungalow in Monterey, but in Fresno?. Forgettaboutit.

On the other hand, places like Newport Beach may well drift slightly upward. A lot of people have become wealthy in the last 5 years (cash, not RE paper profit). Many of us boomers are in our peak earning years, and GW’s tax policies are helping the rich get richer. And places like NB are really where the adage “they aren’t making any more land” applies.

I’m bearish on the housing market, but there’s something unique about every asset bubble. I wouldn;t be surprized if this one involved: (i) declining number of very expensive homes ($2M +), (ii) increasing number of $1-2M homes, and (iii) big declines in the values of POSs in questionable areas.

Comment by Sunsetbeachguy
2006-05-28 18:37:50

Maybe but your point seems to be it is different this time.

I will take the other side of that bet everytime it comes up.

Comment by Ted
2006-05-28 19:01:12

It is differnt this time, now we have more condos and fewer people!

Comment by robin
2006-05-28 21:29:58

We went with friends to Laguna Beach today. Incredibly beautiful, as always, and inevitably crowded, as always. As we took two main thoroughfares (sp?) Euclid St. and Brookhurst St. through the Southern half of Orange County, we saw many, many deep and wide trailer parks.

This led to a lively discussion of how long they would last. Given the disparity between rents and land or property value, it was agreed that, like apartment-to-condo conversions, trailer parks are a likely target. Aren’t we right in thinking they will be the next conversion-to condo (demo for condos or small, 3-story SFHs)target, at least for the OC?

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Comment by Karen
2006-05-28 22:23:30

I don’t think pvb is saying it’s different this time, they are saying Calif is different.

They are wrong. All the realitors in Nevada, are saying Nevada is different. Now both Calif AND Nevada can’t be different.

Comment by pvb
2006-05-28 22:56:17

During the last downturn in SoCal, you could pick up a SFR in NB for $500K or so. Now you need $ 1.2-1.5M for the same.
I’d love to see a crash. Just not sure that’s going to happen in NB, at least in the next 2-3 years (my time horizon).

BTW, I checked out your website. Looks great. Haven;t been to Costa Rica since ‘83 (ouch, that dates me).

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Comment by tj & the bear
2006-05-28 22:59:41

1. Still comes down the creditor/debtor relationships, and the honeymoon’s almost over.

2. Take RE values back down to 1996 and cut the stock indices in half and you won’t have enough true California cash multimillionaires to occupy Malibu.

Comment by pvb
2006-05-28 18:48:54

In general, I agree with you. I’m mostly on the sidelines waiting for the correction. I rely on this blog (from afar), and sort of enjoy watching it play out.

Comment by Sunsetbeachguy
2006-05-29 17:24:05

Do you post at Lansner’s blog?

If so, thanks for the Melissa Data info for AGI for zipcodes. That is useful.

Comment by NorthernNJ
2006-05-28 19:51:27

Here’s an update of what I see in several upscale suburbs of New York in New Jersey’s Bergen County. Generally inventory is up significantly from last year although I would not call the market flooded. Prices have gone down slightly. Well-priced, desirable properties still sell quite well. Houses priced above any recent comp or in an undesirable location (main street, etc.) have been sitting for months on end.

Englewood Cliffs (07632): Inventory is significant in the $2-3M range and moves quite slowly. Anything below $1M still moves pretty well unless it is really small or has significant warts.

Engelwood (07631): Probably has slowed the most of any of the neighboring towns. Inventory is significant in the pricer E. Englewood section. W. Englewood homes sell OK in the right location.

Tenafly (07670): $500-$800K sells very well. High-end has slowed significantly last year with higher inventory and more time on market. There have been shockingly few $1M+ sales in 2006.

Teaneck (07666): The market is very property-dependent. Some properties still sell well-especially those within walking distance of the various temples. Inventory in the $450-600K range is significant with only the most desirable properties selling and the rest sitting with little interest.

Alpine (07620): What’s that old saying? If you have to even ask the price, you can’t afford it.

Comment by arroyogrande
2006-05-28 22:56:44

>Comment by SidneyPrice
>It is fascinating how the different markets interact. Because Portland is
>such a small market, it can maintain a robust RE appreciation from
>equity nomads.

Sid, the correct term is “equity locusts”, for obvious reasons. I believe that term will be in Webster’s within the decade.

Comment by nhz
2006-05-29 03:26:31

Dutch spring rally observations; just for my area of the Netherlands, because it gets harder to get real (reliable) housing facts here.

Yes, I think there is a spring rally here, just like in the UK. Inventory has been climbing for years; it went up +/- 20% between september 05 and march 06, but in april/may inventory numbers have stabilized. I have noticed many ’sold’ signs in the streets, especially for very expensive homes (that is also similar to the UK).

Asking prices keep rising strongly, and in expensive areas there is again lots of flipper activity: some minor remodeling or a quick paint job and the home is resold for 25-50% extra within a few months - often by the same RE agent.

I keep hearing that it is difficult to sell the cheapest properties, most likely because - despite all kinds of subsidies- they are totally out of reach for the ’starters’ who would normally buy these POS homes. And ‘investors’ are probably no longer interested at this price level.

What I cannot easily explain is that average price was down 12% in April from end of last year. I have not seen one single example of a home that sold at a lower price than last year or some years ago. Averages are volatile here because of relatively small numbers; probably there was a price surge end of last year because of some high-end transactions (e.g. luxury condo towers at the ocean front and a new ‘middel-class’ development outside my town).

Just for fun: outside my city there are a lot of simple worker homes that were built for +/- 5000 gulden (2300 euro) in the 1950’s. The owner got many times his investment back by renting them out (heavily subsidized of course). They were sold a few years ago after some minor improvements and cost around 250.000 euro now, that is more than 100x appreciation in 50 years!

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