April 14, 2013

The Next Phase Is Enthusiasm

A reader suggested this for the weekend topic. “This is the text of an email I was forwarded today. Seems like 2006 all over again. April 11, 2013 – Scottsdale, AZ. Greetings! I thought I’d share some great, up-to-the-minute information. Today I had a client who is thinking about upsizing to a larger home tell me that a friend of hers in another town had warned her of impending doom and another forthcoming housing bubble here in the Valley. I reassured her this isn’t the case and told her I get asked this question all the time. I thought I’d also check and see what the most reliable source I know has to say about it. Turns out Mike Orr, Director of the Real Estate Center at the W P Carey School of Business at Arizona State University, wrote this TODAY in his daily observations for The Cromford Report, which he also produces, providing the most current statistics and information regarding the Valley’s real estate market. I don’t want to burst anyone’s bubble, but THIS is the information you should know.”

“From Mike Orr: It’s hard not to notice the plethora of silly articles suggesting the Greater Phoenix housing market is in another bubble, or that prices are soon going to fall. There are a variety of theories but they can all be seen as bogus when examined carefully.”

“Ten reasons why there is NOT a bubble in Phoenix housing right now: The population of Maricopa and Pinal Counties is growing much faster than the housing stock – this is fundamental, yet is hardly ever mentioned.”

“Prices are being driven up by a chronic lack of supply, not by excess demand. Demand is close to normal. Bubbles always have excessive demand from foolish trend followers.”

“Prices are still at the same level as 9 years ago. They still have a lot of room to increase yet.”

” Most buyers are putting their own money in with cash or large deposits, not borrowing it all from foolish lenders as in 2004 and 2005.”

“Lenders are still being ultra cautious. Demand could increase if they ease up.”

“Investors are mostly buying to rent and filling their homes quickly with tenants – if and when these landlords sell it is a neutral event for the market – one extra home becomes available and one extra family needs a home to live in.”

“If investors started to sell off the small number of empty rentals it would slightly improve our market balance, not create a glut of supply.”

“There are several major long term obstacles for developers trying to increase the supply of new homes. Shortage of labor and affordable, accessible land are just the first two.”

“We have a low vacancy rate both in homes for rent and for sale. Multiple generations and even multiple families are sharing single homes.”

“No bubble has ever occurred in the same market twice in the same generation. However after a recent bubble everyone is hyper-sensitive to every price increase and numerous false cries of “bubble” are par for the course.”

“Given the unprecedented imbalance we now have between population growth and new home building, we have several years of rising prices in front of us. How fast and how high they rise I cannot tell, but the idea that prices could fall significantly in the near term because of excess supply is foolish. The only circumstance that could unravel things is a sudden collapse in demand caused by people leaving Central Arizona in droves. Far more likely is a surge in demand from both people and companies deciding to migrate from California. Compared to most of California, housing in Central Arizona is still ridiculously affordable even if interest rates were to double.”

“Multiple studies have shown no significant statistical correlation between homes prices and interest rates. So when interest rates eventually rise, as they surely must one day, this is as likely to increase demand as it is to decrease it. This event would definitely decrease affordability, but we note that one of the times of highest demand (February 2005) was also a time of very low affordability. In fact large numbers of people signing up for mortgages they could not afford was the key characteristic of the February 2005 market.”

The Arizona Republic. “The region’s population growth was also one of the most popular topics at a panel discussion on the housing market last Saturday at Arizona State University. I joined W.P. Carey School of Business real estate experts Mark Stapp and Mike Orr at the event.”

“Orr told the crowd metro Phoenix’s housing market is currently in a state of optimism after falling to despair during the crash in 2008-09. He said the next phase is enthusiasm, and the last time the market was in that state was during the run-up to the boom.”

Minnesota Public Radio. ” Over the past 35 years, real estate investor Dan Grohs has bought and sold hundreds of Twin Cities homes. Because of what’s happening with the supply of housing, he’s convinced that the recent trend of double-digit annual price gains is sustainable. The supply of homes for sale in the Twin Cities is at its lowest point since 2004. The flow of foreclosed properties is dwindling. And homeowners who bought at the peak of the market may still be underwater and reluctant to sell at a loss.”

“As result, Grohs and many realtors report multiple offers and bidding wars on homes. That makes Grohs eager to list some properties he had been renting out. ‘The supply is just not there and the demand is there with the low interest rates. I just think right now is the time to go for me,’ Grohs said. ‘I don’t believe the market will level off. I think it’s going to keep going up.’”

From CNBC. “For the first time in over six months, the supply of homes for sale is beginning to rise. While inventories are still down nearly 20 percent from a year ago, they did rise more than the seasonal norm in February from January, according to a new report from the National Association of Realtors. The raw number of for-sale listings rose 10 percent month-to-month, and when seasonally adjusted, they were up 2.6 percent, the biggest jump in over two years.”

“Low inventory has kept first-time home buyers, who largely seek lower-priced homes, out of the market. Newlyweds Brian and Ali Earle have been looking for a home in Northern Virginia for almost a year. ‘There’s not a lot out there,’ Brian said. ‘It’s actually amazing. We see houses go under contract in a day or two, and so we really have to be on top of the game and be willing to drop everything and run and go check out a house, or it’ll be gone.’”

“Brian and Ali are qualified for a mortgage, but many sellers today still favor the all-cash deal. That puts them at even more of a disadvantage. ‘Everywhere we’ve looked there are at least five or six offers going in within a 48 hour period,’ Ali said. ‘It’s a little stressful.’”




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83 Comments »

Comment by Ben Jones
2013-04-13 08:24:36

From the comments to the AZ Republic article:

“Orr told the crowd metro Phoenix’s housing market is currently in a state of optimism after falling to despair during the crash in 2008-09. He said the next phase is enthusiasm, and the last time the market was in that state was during the run-up to the boom.”

‘and this is good why?? sheesh, we never learn. we need another crash the likes of which we have never seen before. flush these investor maggots out of the market for good.’

A reply:

‘Sorry won’t happen this time around!!!! Investors paid cash for these homes….never to be foreclosed on again!!!!! If they sell…they lose their source of income and will have to pay much much more to get the same rent!!!! NICE TRY THOUGH!!!!’

Comment by brother_jimmy
2013-04-13 14:02:28

Actually I expect the cash investors to get skittish and be the ones who stampede to the exits. If they can take their gains of 30% off the table and plow them into the next fad investment, they will. Its the latecomers and leveraged buyers who wont see the dip coming, and hold on because either they can’t sell and be made whole, or believe its just a couple month correction cycle, a la 2006 thinking.

Comment by Whac-A-Bubble™
2013-04-13 15:07:52

“Its the latecomers and leveraged buyers who wont see the dip coming, and hold on because either they can’t sell and be made whole, or believe its just a couple month correction cycle, a la 2006 thinking.”

Also the end users who used lowdown, low-interest FHA financing to purchase an expensive home in competition with the fly-by-night all-cash investor crowd. One of these two groups is going to sooner than later make a strategically-timed exit, and the other is going to find they are the long-term bagholders on the aftermath of history’s greatest housing bubble.

 
 
Comment by Blue Skye
2013-04-14 05:39:23

“If they sell…”

They can leave the game very abruptly. Investors don’t love houses, they love profits.

 
 
Comment by erik
2013-04-13 08:57:06

When a group like Blackstone buys houses to rent out, it may look like a cash transaction, but it probably isn’t really since the “cash” these big funds put up is still OPM.

Comment by azdude
2013-04-13 09:09:41

yes sir that is true. I think a lot of the cash transactions are with borrowed money too.

Comment by brother_jimmy
2013-04-13 14:06:59

See my comment above. If these investors want their money back and can get it (without lockups), these firms will be forced to sell homes to handle redemptions. If they can’t sell, its either a bailout ala LTCM, a sale through a bankruptcy process ala MF Global, or a combination of the two.

 
 
Comment by Big V
2013-04-13 12:25:01

Yeah, I would like to know whose money it is. Why won’t these people give their money to me? I can buy houses and rent them out with OPM too.

Comment by Whac-A-Bubble™
2013-04-13 15:09:20

It’s high time for you to start a residential real estate investment hedge fund, Big V!

 
Comment by Rental Watch
2013-04-13 20:53:09

Pension funds, endowments, foundations, sovereign wealth funds…family offices to a lesser extent.

 
 
 
Comment by Iwog
Comment by Big V
2013-04-13 12:26:48

But house prices in Phoenix are nothing but up, up, up. Why? Why would people do this? Who is doing this? Where are they getting all this money with which to speculate? Lenders aren’t lending on anything that isn’t a primary residence. You have to have good credit. Who is putting this money into houses, and WHY?

Comment by brother_jimmy
2013-04-13 14:10:17

And you believe everyone who marks a loan as primary residence lives there? I’ve got some oceanfront property to sell you in pinal county too.

Yes, rents In my area are down 10% in the past year. More rental inventory coming on the market daily. Anyone who thinks the rental market is strong is wrong.

Comment by Big V
2013-04-13 14:38:56

They won’t give you a loan if you already have one.

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Comment by brother_jimmy
2013-04-13 16:53:38

Just had lunch with a friend today who is 150k upside down on his current home. he got approved for 200k for a second home purchase. annual HHI probably around 130k.

another good friend owns three homes, each with a minimum downpayment loan.

 
Comment by Bigguy
2013-04-13 21:02:55

Ditto here. Friend owns two and is now buying the third. The banks must not care because of course you’ll rent the other two out no problem.

 
Comment by DaniW
2013-04-14 19:46:03

That’s what I’m reading on a blog devoted to flippers and “wholesaling”
Most of the people on there are nothing but schemers and dreamers but the people who actually are buying so they can be landlords are paying cash for the first house and then getting an equity loan so they can buy a second one with the intent to keep repeating as long as they can

So the outcome of this is that one unforeseen major expense could bring their entire house of cards come crashing down

These people when they go in foreclosure will go in foreclosure in multiples

 
 
 
Comment by Pimp Watch
2013-04-13 15:33:43

What does it matter? Sales in Phoenix collapsed YoY. There are no buyers and rental rates are falling.

I can ask $50k for my 10 year old Honda Civic but where are the buyers?

Comment by brother_jimmy
2013-04-13 16:59:50

You’re wrong. There are plenty of buyers in Phoenix, but at the current price levels there shouldn’t be.

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Comment by Pimp Watch
2013-04-13 17:43:10

Not true. Phoenix demand is down 12% YoY.

 
Comment by Bigguy
2013-04-13 21:06:45

Last year I think was super hot because things were much cheaper. Only 12% down year over year when prices have increased 25% shows the NARSCUM is winning the pr battle, at least for now.

 
 
 
 
 
Comment by Iwog
2013-04-13 09:10:26

BTW,

Cap rates in Phoenix are sub 2% based on tumbling rents and current asking prices of SFR’s.

Comment by Whac-A-Bubble™
2013-04-13 10:26:29

So long as prices keep improving, why do cap rates matter one iota?

Comment by PeakHubris
2013-04-13 10:31:01

By improving, you mean declining prices, right?

Comment by Pimp Watch
2013-04-13 10:39:13

Good point. An improving or recovering housing market is falling prices to dramatically lower more affordable levels, by definition.

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Comment by Big V
2013-04-13 12:28:33

1. Because you don’t know when the bubble will pop, leaving you underwater.

2. Because a rational buyer makes a decision between renting and buying. If it’s cheaper to rent for the rest of your life, then you should.

Comment by alpha-sloth
2013-04-13 18:53:10

If it’s cheaper to rent for the rest of your life,

How do you determine that?

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Comment by Pimp Watch
2013-04-13 19:29:50

You’re a liar and everyone knows it.

 
Comment by alpha-sloth
2013-04-13 19:44:33

You’re a liar and everyone knows it.

Are you reverting to infancy in the final stages of your mental breakdown?

 
Comment by Pimp Watch
2013-04-13 19:51:53

YOU are a liar.

 
Comment by AmazingRuss
2013-04-14 16:53:20

Just a false flag realtor, trying to make us all look like kooks.

 
Comment by Doom
2013-04-16 16:23:14

Old saying …..There are two opinions in life mine and yours.

“Your a liar everyone knows it” I don’t know it?

Lighten up Pimp you can’t save the planet some people just can’ t be a know it all like you?

 
Comment by Iwog
2013-04-17 20:18:59

Old saying….. “There is opinion and there is truth.”

You haven’t learned the difference.

 
Comment by doom
2013-04-18 11:27:11

One person truth is another person’s lies?

 
Comment by doom
2013-04-18 11:34:55

Lets see I’m a independent which means I sit on fence and watch and listen as stupid arguments are made by Democrats and watch and listen as stupid arguments are made by Republicans and come to the conclusion we need a third party system.

 
 
 
 
Comment by Rental Watch
2013-04-13 20:55:32

Math backup? Sub 2% is about the number that I saw calc’d at the peak of bubble in 2005/6.

Comment by Pimp Watch
2013-04-13 21:30:15

Truth back up? All I see is you playing stupid.

 
Comment by Big V
2013-04-15 12:49:04

If anyone was making 2% at the peak of the bubble, then they were making partial interest payments only on their loans. I’m pretty sure it’s not sound to calculate cap rates that way. You have to calculate them based on the ENTIRE mortgage payment.

Comment by Rental Watch
2013-04-17 01:33:01

Actually cap rates are calculated independent of interest rates.

Cap rate is Net Operating Income/Cost. NOI is income generated BEFORE payment on the cost of debt.

And yes a 2% cap rate means that it was very difficult for the income generated to service the debt.

An unsustainable level of prices at the peak (and thus the crash).

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Comment by Whac-A-Bubble™
2013-04-13 10:19:23

“Orr told the crowd metro Phoenix’s housing market is currently in a state of optimism after falling to despair during the crash in 2008-09. He said the next phase is enthusiasm, and the last time the market was in that state was during the run-up to the boom.”

Current phase: Denial

Next up:
- Anger
- Brgaining
- Depression
- Acceptance

Comment by Jingle Male
2013-04-14 06:09:53

Yes Whac, you are absolutely correct.

You just have the wrong group in mind. The people in denial of the recovery are the ones who will experience all these feelings when they realize housing has bottomed, while they waited fruitlessly for housing to melt down further.

The recovery is well documented and a natural trend after a recession. Why do you think “This time it will be different?”

Comment by Ben Jones
2013-04-14 07:07:56

‘when they realize housing has bottomed, while they waited fruitlessly’

Dang, he said fruitlessly. That’s it, we’ve all gotta buy a house now.

This is what’s funny about some of these anonymous ‘you better buy now or you’ll rent forever’ posts; why are you letting us peasants in on your windfall? For that matter, why does the media and REIC seem to be so busy trying to convince everyone about this ‘buy a house now’ thing?

Comment by DaniW
2013-04-14 19:56:09

So true

I currently rent a sixth floor apt in the bay area for a slightly lower than average rent for a 700 sq ft that allows pets within walking distance of downtown

If I wanted to buy something like this I couldn’t - there is no comparable apt in this city ( not sf) if I wanted a sixth floor condo I’d have to pay a million dollars which I can’t afford and wouldn’t pay if I could afford. It would be four times as big but I don’t need that much space.

The fact is there is too much upper end and too little in the middle and nada at the bottom to buy so renting is a much better option

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Comment by Whac-A-Bubble™
2013-04-13 10:23:13

Do you notice how U.S. federal government and Federal Reserve Bank housing market intervention never, ever comes up in these ‘housing market expert’ discussions about the housing recovery?

Are these dummies really as ignorant as they seem about the historically-unprecedented effort by the federal government to paper over a collapsed bubble? Or do they truly believe that this level of market support is sustainable?

Enquiring minds want to know!

Comment by Whac-A-Bubble™
2013-04-13 10:25:22

Anything which cannot go on forever will stop.

– Herbert Stein

 
Comment by ahansen
2013-04-13 11:04:37

“… as ignorant as they seem…they truly believe…”

Yes.

 
Comment by Big V
2013-04-13 12:30:10

They don’t care if it’s sustainable. They only care to ensure that the uber-wealthy can be made whole today.

 
 
Comment by Ol'Bubba
2013-04-13 10:44:06

Question for the blog-

Aren’t Iwog, Whac-A-Bubble™, and PeakHubris are all aliases of Exeter/RAL?

Comment by Pimp Watch
2013-04-13 10:56:22

Bulletin for old blubber….

Your ruse is up.

 
Comment by Pete
2013-04-13 14:38:26

“Aren’t Iwog, Whac-A-Bubble™, and PeakHubris are all aliases of Exeter/RAL?”

Iwog and Whac-A-Bubble were just rolled out today (I think), but the answer is yes.

 
Comment by Whac-A-Bubble™
2013-04-13 15:11:12

Check out yesterday’s bits bucket for your answer. :-)

Comment by Pimp Watch
2013-04-13 15:50:35

Who in hell is exeter?

Comment by mikeinbend
2013-04-14 15:32:03

some troll

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Comment by Pimp Watch
2013-04-14 16:20:52

Speaking of Dumb Money

 
Comment by mikeinbend
2013-04-14 19:30:25

That’s a bold statement

 
Comment by p
2013-04-14 19:50:20

directed toward a weak man

 
 
 
 
Comment by Prime_Is_Contained
2013-04-14 15:47:41

Aren’t Iwog, Whac-A-Bubble™, and PeakHubris are all aliases of Exeter/RAL?

From the posting style, I have been assuming that Whac-A-Bubble™ was Get Stucco/Professor Bear/Cantankerous Intellectual Bomb Thrower.

 
 
Comment by Pimp Watch
2013-04-13 11:24:36

90% of Foreclosed Properties Held Off the Market

http://realestate.aol.com/blog/2012/07/13/shadow-reo-as-much-as-90-percent-of-foreclosed-properties-are-h/

They’re still there. 20-30 MILLION of them. Disposition: Excess empty inventory.

pssst…… If you think a 20 year old ranch is worth more than $50/sq ft, you’ve been lied to.

… and if you’re paying more than $60/square foot for a resale housing, you’re getting ripped off.

Comment by Big V
2013-04-13 12:32:04

As long as the banks get subsidized by Uncle Fed to hold their houses off the market, they will continue to do so. Why does Uncle Fed not care about me. Uncle Fed, why won’t you love ME?

 
 
Comment by 2banana
2013-04-13 11:57:06

Welcome to the obama housing bubble v2.0

$6.5 Trillion in NEW deficit spending

Trillions in obama bailouts and stimulus

The government now borrows 46 cents of every dollar it spends

The Feds pumping in $80 billion/month to buy near worthless bank assets

The money HAD to go somewhere.

$4.00/gal gas prices…

$500,000 crack shacks…

Savers making 0.00000001% on their money…

It is quite a legacy.

Comment by Big V
2013-04-13 12:33:58

Why do you blame Obama for everything? When Bush was President, you did not blame him for anything.

Comment by PeakHubris
2013-04-13 17:16:29

Shhhh, don’t tell anyone.

 
Comment by Wine Country Dude
2013-04-14 13:28:31

Um, because Obama has been President for more than four years, and he has had control of the situation–at least to the extent any President has control of it. Even GWB.

 
 
 
Comment by Big V
2013-04-13 12:20:06

Housing bubble 2.0, here we come. Unbelievable!

Comment by Whac-A-Bubble™
2013-04-13 15:12:53

Which do you expect to pop first: The gold bubble, the Bitcoin bubble, or the housing bubble 2.0?

Oh wait…

Comment by Bill in Los Angeles
2013-04-14 07:21:49

An even larger bubble, by geometric proportions, is the fiat money bubble. I will continue to exchange my lettuce for precious metals bullion.

 
 
Comment by Pimp Watch
2013-04-13 15:35:15

No V…… It’s still the first bubble and prices have a very long way to fall.

Comment by Ben Jones
2013-04-13 16:02:03

‘It’s still the first bubble’

I don’t think there’s any way to prove it, but that’s how I see it. This statement has some truth to it:

‘No bubble has ever occurred in the same market twice in the same generation.’

But, if stocks turn out to be a bubble, that theory won’t have held. Along those lines, Orr says, ‘it can’t be a bubble, we just had one.’

In housing, there has never been such a concerted effort by banks, government and central banks to provide fuel for a speculative mania. It doesn’t matter IMO. What does matter is what the effect of a price collapse will be in the future. And if it’s a bubble, it will collapse. The economy is in the dumps. We could see another round of financial “crisis”, more unemployment, HUD/GSE bailouts, and many millions more foreclosures. If all that comes, the media probably won’t be asking if this is bubble 1 or 2. But they will be looking for someone to blame.

Comment by brother_jimmy
2013-04-13 17:03:45

And like last time, the last place they will look is in the mirror, at buyers who never had a chance in hell of repaying money they were lent. At some point, there needs to be personal accountability and people need to stop buying stuff they can’t afford. That banks via government intervention are a contributing factor, but they are not the root problem.

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Comment by Rental Watch
2013-04-14 01:14:57

Are you thinking that it’s the same bubble because the bubble mania doesn’t appear to have left the market? Or because prices haven’t corrected back to the longer-term trends?

I think the former may be correct…however, the latter doesn’t appear to be the case from the data I’ve seen.

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Comment by Ben Jones
2013-04-14 07:02:05

‘the same bubble because the bubble mania doesn’t appear to have left the market? Or because prices haven’t corrected back to the longer-term trends’

Both.

 
Comment by Whac-A-Bubble™
2013-04-14 11:38:15

‘the same bubble because the bubble mania doesn’t appear to have left the market? Or because prices haven’t corrected back to the longer-term trends’

These are mutually-reinforcing factors which appear to have led to housing prices achieving a permanently-high plateau.

 
Comment by Ben Jones
2013-04-14 14:04:37

As the article you posted elsewhere said, ‘These are all techniques last seen with frequency during the frothiest months of the housing bubble in 2004-05.’

‘Techniques’ is an interesting way of putting it. When i started this blog, I would look at statistics, corporate filings, etc. But I also found interesting reports of people camping out in lines for houses or condos. So I started following the various absurd things people were doing to buy a house. I say absurd; the people doing it didn’t think they were doing anything odd. Like the lady said who was camping out in Huntington Beach recently, ‘this is what you have to do.’ We can laugh at promising to feed squirrels, but there was a certain desperation involved that doesn’t convey with the recollection. Like this from the post above:

‘We see houses go under contract in a day or two, and so we really have to be on top of the game and be willing to drop everything and run and go check out a house, or it’ll be gone’…‘Everywhere we’ve looked there are at least five or six offers going in within a 48 hour period,’ Ali said. ‘It’s a little stressful.’

So why don’t they just step away? Because they feel it will never stop going up. That’s the underlying emotion to be gained from these sorts of antics; the motivation. That’s where the mania either is or isn’t. Same with the “locked out” comments posted on this blog recently.

There are people who knowingly take part in a bubble just to make a few bucks and expect to bail out in time. But a mania must be populated by a vast majority of true believers to really take off.

Here’s a couple of things about the current situation. Right now, the dominant theme in speculation is rentals. When/if that changes into flipping, we’ll be closer to the end. Lots of flipping is going on now, but it isn’t the headline in the media.

Another matter is after the fact justification. As prices move up, certain justifications no longer work, so new ones must be invented. I heard recently that 1,000 people a day are moving to Texas. It may or may not be true, but that is an example we saw many times to explain away unsustainable price increases. One that may be running it’s course is the rich Chinese investor line.

Then there’s credit. When the market starts to lose steam, new buyers are needed. Didn’t Obama just start to push for subprime loans?

And don’t forget the builders. When these guys believe they can make a couple hundred thousand on every shack they throw up, they will oversupply the market. No matter how many houses sit empty for whatever reason, there is no shortage of land and artificially high prices always result in overbuilding. IMO, that process is well underway too.

 
Comment by Whac-A-Bubble™
2013-04-14 16:20:33

“IMO, that process is well underway too.”

It stares me in the face every day I drive to work and back…

 
 
 
 
 
Comment by Sam
2013-04-13 20:28:51

I rather agree with the last commenter, in that the ultimate responsibility often rests with home buyers.

Comment by Whac-A-Bubble™
2013-04-13 21:17:18

Please inform our California government officials of your amazing discovery!

Foreclosures Down In California, Up In Nevada
By Steve Milne

A new ranking of U.S. metro areas with the highest foreclosure rates is out. The report shows home repossessions in California continue to plummet.
(Sacramento, CA)
Thursday, April 11, 2013

At number 11, California finally dropped out of the top ten In March. RealtyTrac’s Daren Blomquist says that’s a milestone.

“This is one of the few times I’ve seen over the last seven years, if not maybe the first time, it’s not been in the top ten.”
Blomquist says there were more than 18,000 properties with foreclosure filings in March, a nearly 60% drop from a year ago and about 3% lower than February.

He says the numbers are going down for three reasons: the state has already dealt with bad loans issued during the housing bubble; the housing market is getting better; and California’s recently enacted Homeowner’s Bill of Rights has put stricter guidelines on lenders.

But Blomquist predicts lenders will be issuing more foreclosure notices once they adjust to those new guidelines…

 
 
Comment by Whac-A-Bubble™
2013-04-14 11:39:46

BOOM TIMES ARE BACK, AND SO ARE THE PITFALLS
By U-T San Diego 12:01 a.m.April 14, 2013Updated6:24 p.m.April 12, 2013

-16% Change in nationwide real estate inventories from year-ago levels

They’re back after barely a decade: Escalation clauses in real estate contracts, “naked” contingency-free offers and lowball-priced listings designed to pull in dozens of bidders and turn routine sales transactions into auctions.

These are all techniques last seen with frequency during the frothiest months of the housing bubble in 2004-05, when prices were rising at double-digit rates, buyers thought they couldn’t lose money in real estate, and mortgage financing was available to anybody who could sign a loan application.

Now they are reappearing in some of the hottest sellers’ markets from coast to coast — the byproduct of severe shortages in houses listed for sale combined with strong demand by qualified purchasers.

Nationwide, according to surveys of 800-plus local markets by Realtor.com, inventories are down by 16 percent from year-ago levels. But in the hottest areas, listings are down by double or even triple that and prices are moving up fast.

Buyers, meanwhile, are out in droves, scanning newspapers and online realty sites for the latest listings, and signing up for alert services provided by realty firms. In the San Francisco Bay Area, for example, agents say that realistically priced new listings are attracting dozens — sometimes even hundreds — of shoppers to open houses and stimulating bidding competitions with 30 to 50 or more participants.

Bidding wars are also increasingly frequent on well-priced listings in Washington, D.C., and its Maryland and Virginia suburbs, much of California; Seattle; Phoenix; Las Vegas; Richmond, Va.; Boston and parts of Florida, among others. In a handful of fiercely competitive areas, some listing agents reportedly are even restricting buyers’ access to properties to narrow time windows — say, a few hours on Saturday and Sunday — in order to fan the flames.

 
Comment by Jetfixr
2013-04-14 13:12:35

I read somewhere that humans don’t learn from their mistakes…….given a certain set of circumstances, they will respond the same way, no matter how bad the results were the first time.

Housing Bubble 2.0 = Exhibit A

 
Comment by Beachchic
2013-04-15 13:10:56

I am still renting, 8 years after my divorce and not about to get into a bidding war frenzy, only to buy a smaller place than I currently rent. It would be more expensive too. People are so uninformed and believe anything the media and propagandists report. I know of several coworkers in the OC who are in escrow for homes in sketchy areas. They fell into the trap that they better buy now or be priced out forever. They believe they better lock into the historically low interest rates now or they won’t be able to afford the monthly payment. Many people are in la la land.

Comment by doom
2013-04-15 13:55:50

Beachchic for your circumstance it may be best for you to rent, for others it may be the best time to buy. What you have now is folks that bought property at insane low prices and can now realize a very nice profit, they were not afraid to invest during the crisis.

Other people got burned so badly that it makes sense to sit on the sidelines rebuild their lives, credit rating etc. so renting makes sense to them.

I can assure you this is a catch 22, many underwater people are so underwater they can’t take advantage of the latest rise in prices because they paid just as insane prices as the investor paid very low prices the last few years.

Comment by Pimp Watch
2013-04-15 18:09:29

Beachchic for your circumstance it may be best for you to rent, for others it may be the best time to buy.

You’re peddling garbage. At these grossly inflated prices, it’s “the best time to buy”? You’re a fraud.

What you have now is folks that bought property at insane low prices and can now realize a very nice profit, they were not afraid to invest during the crisis.

More lies from you?

Prices are lower today than they were during your “crisis”. Furthermore, there is no “profit” on depreciating assets at retail prices.

Here’s a hint for you….. we’re going to respond to every last one of your lying posts. Get used to it.

 
 
 
Comment by ahansen
2013-04-16 00:20:23

On first glance I thought the headline on this was “The Next Phase Is Euthanism”.

 
Comment by Terry Day
2013-06-02 21:45:30

Great Article Ben. With demand being so high in the valley for rentals and houses under 120k going quickly, the condo market is sure to follow with strong growth in values. We will have to keep an eye on the the volume of homes on the market to see when is about to fail. I was reviewing the stats for my blog and there was an increase of 40-60% in housing supply from July 2005 - January 2006, over the previous years supply. After that the market started its slide.

 
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