‘Is It Time For Incline To Hit The Panic Button?’
The North Tahoe Bonanza has this report from Nevada. “It is the beginning of June and more than 220 single family homes (and counting) are on the market. Open your real estate guide today and guess what you’ll see, less than a half-dozen of these homes are priced under a million dollars, and the lowest priced of these is an A-frame painted barndoor red listed for the bargain basement price of $675,000.”
“Is this skyrocketing average home price here a realistic number with interest rates continuing to rise, the media jumping on the ‘bubble’ bandwagon and speculation-driven weekend real-estate-course investors starting to catch up to the real numbers?”
“In other words, is it time for Incline to push the panic button? The answer, quite simply, from some long-time Realtors in town is, ‘no - with an asterisk.’”
“‘It is what it is,’ said Tanager Realtor Tom Bruno. ‘This is gut feeling, but having been here since ‘71, I’ve seen the market go up and down. After spikes in the market, typically there’ll be a fall-off on the backside.’”
“And what of that fall-off? ‘My gut feeling is values will drop 3 to 6 percent by the end of the summer,’ Bruno said. ‘We may experience a period of flatness and then it’ll probably go back up again.’”
“But, that doesn’t mean Incline hasn’t gone through its fair share of down times. ‘Back in the early ’80s, in the ‘83 range, there were 900 homes available on the market,’ Bruno said. ‘You know there was a slightly off-color joke then: ‘What doesn’t belong here? Gonorrhea, syphilis or an Incline home?’ - the answer was (the latter) because you couldn’t get rid of an Incline home.’”
“While nobody’s predicting the long, cold winter of the early ’80s market saturation or even the ‘bump in the road’ that was the recession of the early ’90s, it is impossible to ignore prognostications that Incline, like the rest of the West, is due for a dip.”
“Many erstwhile ‘hot’ markets, including the Bay Area and Sacramento are now cooling off, even if that means the absence of the once ubiquitous bidding wars over every condo, bungalow and split-level.”
“With interest rates still on the rise, banks have started to curb the five-year interest-only loans that so permeated the real estate landscape since 2000; concern, not panic, is perhaps the name of the game on the Nevada side of North Lake Tahoe, some local Realtors and mortgage brokers said.”
“‘It’s becoming a buyers’ market and in a buyers’ market people can be more selective,’ said Mark Case, a mortgage planner. ‘But, in a buyers’ market, people are still going to be buying so they’re still going to need loans. In the re-financing portion of the industry is where we’re going to feel it.’”
“Case noted that with the Feds looking to raise interest rates again in the upcoming months, now may, in fact, be a season to buy. ‘There are going to be more Fed hikes,’ Case said. ‘So it may be a case of people wanting to get in the market now.’ Of course, many Incline Realtors agreed that now may be the time to buy.”
“‘People have to live in the now,’ said long-time Incline Realtor Syd Brosten. ‘So many people think their home or condo is worth more because they saw a neighbor sell their property for more and they say ‘well, our place is nicer so it should sell for more They price it according to that and are surprised when they don’t get it. People that have to worry are those who have their houses overpriced and they have to sell.’”
“Brosten said some people may be disappointed if they think returns are going to be congruous with the last couple of years. ‘It is still cheaper (here) than in the Bay Area and other parts of California,’ Brosten said. ‘We are not Reno and Vegas where they’ve overbuilt and it’s rampant speculation.’”
“‘It’s becoming a buyers’ market and in a buyers’ market people can be more selective,’ said Mark Case, a mortgage planner. ‘But, in a buyers’ market, people are still going to be buying so they’re still going to need loans
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Tell that to the areas where sales are off 30-40%!
‘We are not Reno and Vegas where they’ve overbuilt and it’s rampant speculation.’”
_________________________________________________
The 20,000 time a realtor has said some other market will implode but NOT MY MARKET
WHERE HAVE ALL THE PROFITS GONE FROM THE HOUSING BOOM???????????????????
http://money.cnn.com/2006/02/23/pf/consumer_fedsurvey/index.htm
A Federal Reserve survey finds slowest increase in Americans’ net worth in over a decade.
By Jeanne Sahadi, CNNMoney.com senior writer
February 27, 2006: 2:39 PM EST
NEW YORK (CNNMoney.com) – Americans’ net worth grew between 2001 and 2004, but not nearly as strongly as it did between 1998 and 2001, according to the Federal Reserve’s triennial Survey of Consumer Finances released Thursday.
The big reason: while household assets increased, debts – particularly mortgage debt — rose considerably more.
Net worth: Median net worth rose 1.5 percent, to $93,100. The median is the point at which half of all households have a higher net worth and half have a lower net worth.
By contrast, between 1998 and 2001, the median net worth increased 10.3 percent.
The increase in net worth in the latest survey was due mostly to an increase in home ownership and an increase in housing prices.
Income: A decline in wages also helped account for the slow growth in net worth.
While the median income rose 1.6 percent, to $43,200, after adjusting for inflation, median wages fell 6.2 percent. Wages make up the largest part of family income.
Despite lower interest rates between 2001 and 2004, families spent more of their incomes paying off their debt.
The growth in income was the slowest since the Fed’s 1992 survey, when median income actually fell.6.7 percent, to $35,100, between 1989 and 1992.
Savings: The percent of families who said they’d saved in the preceding year fell 3.1 percentage points, to 56.1 percent.
Similar to past surveys, 7 percent of families said their spending usually outpaces their income; 16.1 percent said they spend about what they make; 36.1 percent said they save income left over at the end of the year; and 40.8 percent said they save regularly.
Assets: The percentage of families who owned assets rose 1.2 percentage points to 97.9 percent.
The median value of all assets combined rose 10.3 percent to $172,900.
The survey breaks down assets into two categories: financial assets such as stocks and bonds, and non-financial assets such as homes.
The median value of financial assets fell 22.8 percent to $23,000.
Meanwhile, the median value of non-financial assets rose 22.2 percent to $147,800. (See correction below.)
Debt: The share of families with debt rose 1.3 percentage points to 76.4 percent.
Among families with debt of any kind — including mortgages, other loans and credit cards — the median level rose 33.9 percent to $55,300, far greater than the 9.5 percent increase seen between 1998 and 2001.
The median level of mortgage debt increased 27.3 percent to $95,000.
Stock ownership: The percentage of families investing in stocks, directly or indirectly through mutual funds, fell 3.3 percentage points, to 48.6 percent.
It’s the first time the Fed has measured a decline in stock ownership, which had been on the rise since 1989, when the Fed began its first consumer finance survey.
The median value of stock-related holdings also fell, by 33.8 percent to $24,300.
You know where it’s gone. Boobs, babies and bacchanalia.
lol. hilarious.
Oh, I see you’ve met my neighbor. When someone asked me how old his wife was I replied; “Which parts?” The end scene of their marriage included a Lotus, MB, Maseratti and a hatchet, ouch.
“many Incline Realtors agreed that now may be the time to buy”
Funny, I can’t remember hearing realtors saying “it’s not time to buy”. I’ve heard “it was crazy late last year, but now is the time to buy”. Of course, late last year the same realtors were saying “get in before you get priced out of the market”
Man, those real estate brokers really know the market ! Buyers market, sellers market, good market, bad market, hot market, slow market. It is ALWAYS time to buy ! Maybe because then they get a commission ! Ya think ?
Like the new pics - those from Detroit tell the true tale of what job losses can do to an economy
Here are some Incline rental ads from the paper linked:
Incline Village nearly Lake Front. 3bd, 2ba, 2 car gar. Prvt. beach access. 2300 sf. $3500/mo.
4bd, + den. 3ba, 3 frpls, 2car gar, laundry room, large kitchen, deck. Fantastic lake views, N/S pets? $2500/mo.
Eastern Slope Lakeview
4bd, 3ba, 2car gar, Large kitchen, 1yr lease, $2700 + utils. N/S/pets. Call owner/agent
4bd + den, 2ba 2 frpl 2200sf, grt front & back yd (fenced) w/lrg deck. Located on flat quiet st, in a low elev neighborhood, close to schools & shopping. N/S pets? 1 yr lease $1700/mo
3bd, 2ba, large un-furn house, close to lake, 2 car gar, large fenced yd, frpl, & Wdstv, N/S, pets okay. $2100/mo.
3bd Sunnyand quiet
2ba, Oak Kit, wdstv, deck, 2car, W/D. N/S. Sm dog $1695/mo.
2bd, 2ba, 1 level home. 2 car gar, Spac rooms, Incline Village. 1 yr. lease. $1425 mo.
MOVE IN
SPECIAL
Get 1st Month
Rent Free
2 - 3 bedrooms from $700 at Stateline, Nevada. Private Beach, quiet, gated community. Pets on approval.
Incline Village nearly Lake Front. 3bd, 2ba, 2 car gar. Prvt. beach access. 2300 sf. $2800/mo.
Maybe some locals can let us know what’s happening there.
“While nobody’s predicting the long, cold winter of the early ’80s market saturation or even the ‘bump in the road’ that was the recession of the early ’90s, it is impossible to ignore prognostications that Incline, like the rest of the West, is due for a dip.”
Due for a dip..yep..that’s one way to put it. I was talking to my neighbor in the driveway today about the state of the economy. When housing came up he said “It’s gotten expensive, but they say there’s really no bubble.” I asked him to elaborate a bit, and what he was really trying to say was there is no national bubble. I said, “Yes, but this is Los Angeles. Wouldn’t you agree there may be a bubble here, along with D.C., Boston, Phoenix, San Francisco, San Diego, New York, Florida and others?” He said, and this was the first time he has ever agreed with me at all on this subject, “yeah, you’re probably right”. I never thought I would hear that from him…wow.
‘My gut feeling is values will drop 3 to 6 percent by the end of the summer,’ Bruno said.’
Holy Cow!!! This really is a crisis!!!
The real crisis comes when his commisions drop 50%.
And then he said prices would flatten out for a while and probably go up again. Let’s see: Real Estate explodes to the tune of 20%+ appeciation for 5 years straight, right when it should have been flattening out and beginning its downward cycle. Now we’re expected to believe that it may dip 3%, flatten out for a year or so and then continue marching higher?!? Great analysis, Bruno.
IV is one of those places that defines artificial scarcity. Most of the desirable (lakefront) property on the Nevada side of the lake is locked up by the government and will probably never be developed. The houses built up the hill in back of IV have “snow issues”, which is why some of the listings mention “flat street” and “low elevation”. The small number desirable houses are clustered in a small strip near the lake in a confined area.
I have never seen a time when houses there were what I would consider reasonably priced, and I started looking in 1994.
I agree Incline Village is such a small, specialized market I don’t think any generalizations based on what is happening there is informative.
The whole Tahoe area is to me is an aesthetic disaster zone. A beautiful place ruined by rampant, and for the most part ugly, development. The mountains around the lake are nice though.
Just checked the Census Bureau webite. Incline Village has 9,952 people and 7,664 housing units. That would put about 2.87% of the homes for sale.
Obviously a lot of second homes. From some mls sites, it appears the prices there are way high. The area is 50 square miles, but 21 of those are water.
OT, from my foreclosure blog:
‘We’ve analyzed the 33 foreclosures that were commenced on property in the city of Lowell (Mass) in May. One-third of them involved mortgages that were used to purchase the property. Ten of these eleven purchases also had second mortgages recorded at the same time.”
‘Only one of the eleven mortgages had any equity in the property. With nine of them, the first and second mortgages equaled exactly the purchase price meaning that the buyer put no money down on the purchase. All but one of the lenders involved were from outside the area with Option One leading the way with six of the 33, followed by Ameriquest with 3 and WMC Mortgage with 3. Two of these purchases occurred in 2003, four in 2004 and five in 2005.’
‘The other 22 foreclosures (two-thirds of the total) were refinances on properties that were owned for an average of 4. These homeowners had an average of four mortgages since they purchased the property, meaning that they had refinanced more than once. One had eight different mortgages, another had six, and five homeowners had five different mortgages.’
‘Sixteen of the 22 original purchases seemed to be ‘arms length’ transactions in which the homeowner purchased for something close to fair market value. Of these sixteen, the amount owed on the mortgage being foreclosed was on average $92,000 more than was paid for the property in the first place.’
All I can say is WOW. That is very telling. I’m almost tempted to get back in that business just on that info alone.
Of these sixteen, the amount owed on the mortgage being foreclosed was on average $92,000 more than was paid for the property in the first place.’
Yeah… this should be a soft landing. No problem. When this gets to be commonplace, like in about 6 months, and we send some Chinese investors a little not that their bonds are worthless, that should go over real well. What did you say ? Dollar crash ? Oh… I forgot about that !
Any of you guys seen “Inconvenient Truth” yet?
How about some global warming weather to pop real estate bubbles and economies…?
I welcome comments on the movie, “inconvenient truth”, and how people ,with steep mortgages on real estate, may find global warming an inconvenient truth that makes them uncomfortable to be aware of. Being that they are now locked into a mortgage that has them up to their financial eye balls, can’t find a buyer. The threat of one of a number of disasters could take them out financially. And now, throw in their insurance company pulling the carpet from them and canceling their policy.
And on top of that, by contract with their mortgage company, they are required to have insurance on the real estate.
OOPS!!!
What happens if the devastation to the masses of these people saddled with steep mortgages all go belly up at once? Could congress (USA) be pressured into re-instating a debtors prison? Then you would literally be a slave to “the man”… eek…
Who can they unload that financial anchor shackled to their ankles… priceless….
Los Angeles Friends In Deed
First of all, these “news” article writers gotta stop asking realtors for sage advice. Kinda a conflict of self-interest, no? The NAR’s mission statement reads: “The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful.” These people are not qualified to go around making market predictions and they are not capable of giving un-biased economic advice. It drives me nuts to see Lereah or any of them quoted constantly as oracles of sound and balanced missives on market conditions. It’s appalling that they are even quoted as encouraging people to “buy now” since it violates their own code of ethics. They are contract writers, property showers, and escrow babysitters….they have NO BUSINESS espousing in a public forum their self-serving opinion that people should “buy now”. If the NAR was really following their mission statement, they’d put the hammer down on agents that talk out their asses.
Secondly, the presumption that this exploding high inventory equals a “buyer’s market”. A buyer’s market would be, um, when, you know…. BUYERS appear in enough numbers to keep the inventory relatively balanced.
Right now, it’s safe to say there is no market. Nada. Zip.
Catherine, you have hit on my pet peeve. Reporters seeking sources and quoting them ad nauseum who are obviously biased towards real estate. I sold financial products for years and this is the illegal equivalent of “talking your book.”
Also, it seems like the new national mantra, “this is a normal correction, just a little dip, nothing to worry about, move along, now is a great time to buy, buy now before interest rates go up, don’t worry about anything etc…” This is nonsense as we all know and it is providing the clueless with a temporary warm blanket. This blanket will be rudely pulled out from under them when they realize the true ramifications going forward.
Catherine ……Well said and so true .
“First of all, these “news” article writers gotta stop asking realtors for sage advice.”
I don’t understand that either. Is there no government department that issues news on sales ? The way it is right now, its like asking a crack dealer if the drugs are good. Of course he will say yes. Doesn’t matter that they will kill you. He just wants his commission and they will say ANYTHING to sell another house.
I love it when someone I know says “but my realtor told me…..” Dear God! What the *$#@ else do you expect them to say!….and what kind of friggin’ idiot are you for not getting it.
I agree with you on this one.
This subject reminds me of a quote by Upton Sinclair, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
This quote was also reference by Al Gore in the movie that out right now, Inc onvenient Truth. watch trailer.
He also talks about housing and real estate in the filme.
This subject reminds me of a quote by Upton Sinclair, “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
This quote was also reference by Al Gore in the movie that is screening in movie theaters now, Inc onvenient Truth. watch trailer.
He also talks about housing and real estate in the film.
Los Angeles Friends In Deed
and Blog
Prices in Incline Village haven’t dropped much yet but unit sale numbers have declined significantly in 2006 thus far. If you look at data through April 20 of the last 3 years:
2004: 180 sales
2005: 167 sales
2006: 93 sales (54% of the last 2 year average)
Sales don’t really pick up until summer so it will be very interesting to see what happens. There were 737 total sales in 2005, 658 total sales in 2005.