What Is A Healthy Housing Market?
A poster suggested this for the weekend topic. “What constitutes a ‘healthy’ housing market seems to differ wildly depending on whose lens you see the world through. Examples:
Broker: Healthy = lots of sales
Individual without liquidity: Healthy = low mortgage standards
Individual with liquidity: Healthy = low prices
Banker: Healthy = few mortgage defaults
Builder: Healthy = strong demand for new homes
What is a ‘healthy’ housing market?”
Go Local Worchester. “Central Massachusetts has recently seen greater stability and improvement in the housing market — and now home values are beginning to rise after remaining stagnant over the past few years. The region has not seen two consecutive periods of positive indexing since the last two quarters of 2006. The index saw record lows in 2008, during a time of worldwide economic decline, but a slow and steady climb upwards has finally net positive results.”
“‘You definitely see it moving in the right direction,’ said Michael Barbara of Real Living Barbara Associates in Worcester. ‘Central Massachusetts has seen an increase in transaction volume, and a slight stabilization of home prices.’”
“‘This year we’ve seen Baby Boomers on the move, and they are doing what we call ‘right-sizing’,’ said Erika Hall of Keller Williams Realty in Worcester, ‘who are looking to move out of a large family home now that they have two or three empty bedrooms and are paying to heat a much larger house than they need.’”
“With a number of ‘boomerang children’ of Generation Y moving back in with their parents after college, a greater number of larger homes will be on the market in the coming year. ‘A new construction trend we’ve seen this year is multi-generational homes with in-law suites,’ said Hall, ‘We are not sure who will be absorbing these homes already on the market.’”
Culture Map Houston. “Houston’s existing home sales broke more records in October, as the city’s strong economy and low mortgage rates extended a phenomenal run for real estate. Houston realty veteran Martha Turner said one of her Memorial-area listings, a townhome priced at $995,000, drew offers from 11 bidders. ‘It’s never been like this before,’ says Turner. ‘There’s not a part of the city that’s not doing well.’”
“Lower inventory drives up home prices and creates bidding wars between buyers. Buyers must be nimble and be prepared to offer all-cash or be prepared to close quickly. Sellers are dictating the terms in this market. Prices are going up.”
The San Francisco Bay Guardian. “San Francisco’s Housing Element, a study of housing needs mandated by state law to ensure that cities are addressing their affordable housing obligations, called for the city to build 31,193 housing units from 2007-2014. Partially as a result of the 2008 financial meltdown, San Francisco fell far short of that goal, with just 11,130 units getting permitted, most of those market-rate units.”
“But that was enough to meet 60.6 percent of the projected need for serving those earning 120 percent of area median income and above, whereas the city entitled just 360 units for moderate income San Franciscans — 5.3 percent of the projected need — and 3,313 units for low-income (80 percent of AMI and below), or 27.3 percent of the need.”
“So it isn’t that San Francisco is facing a ‘housing crisis,’ as Housing Action Coalition and others often proclaim, it’s that the city is facing an affordable housing crisis driven by not building enough below-market-rate housing and allowing real estate speculators to cannibalize the city’s rent-controlled housing.”
“The trend in what’s being built in San Francisco and what those units are going for only increases the pressure on tenants in rent-controlled apartments, who are now being displaced at rates not seen since the last dot-com bubble, both through evictions and buy-outs. Contrary to the supply-and-demand arguments made by pro-development cheerleaders, there’s no evidence that the housing supply now being built is doing anything to help most San Franciscans.”
“‘Trickle down theory is going to f*ck San Francisco, it’s not going to help it,’ said Peter Cohen, a housing activist who also works for the San Francisco Council of Community Housing Organizations.”
A Healthy Housing Market is, for one, a market devoid of wannabe sellers who priced their homes too high to sell them during the Red Hot Spring, Summer and Fall Sales Seasons and hence have to spend their holiday trying to unload a depreciating debt shack on unsuspecting greater fools.
Should you buy or sell a home during holidays?
By HANG NGUYEN
Special to the U-T
5:39 p.m. Nov. 22, 2013
Entertain out-of-town guests. Shop for Christmas gifts. Cook a big meal.
That’s one example of a to-do list for the Thanksgiving and Christmas holidays. How will you accomplish it all — much less squeeze in the substantial amount of time it takes to list or buy a home. That’s why so many folks don’t try to sell or buy a house near the end of the year.
But several local real estate experts strongly advise you to take advantage of the typically slower winter season to try to find a buyer for your house or to purchase one.
For sellers, you’re getting serious buyers and competing against a much smaller pool of for-sale properties. For buyers, you may get a better price and terms because you’re likely negotiating with a motivated seller.
Debbie Neuman, a real estate agent for Berkshire Hathaway HomeServices California Properties in San Diego, will be working this Thanksgiving. Her partner will be on the clock on Christmas.
…
Let’s take this apart logically. First, separate the housing part and ask, what’s a healthy market in general?
Back to the original question: Broker…Individual without liquidity…Individual with liquidity…Banker…Builder’
Add sellers, etc. It would seem that what’s healthy would be self sustaining for all participants (nearing equilibrium), provide the product at the lowest cost possible, while providing sellers a reasonable profit. Such a situation would insure no shortage or over-supply. Require neither public subsidy nor price controls.
We know it’s not normative when the typical person has to commit financial suicide just to buy a house.
We know it’s not normative when Gov dollars are used endlessly to bribe and incentivize financial suicide.
Your government wants to enslave you through any means possible.
When you think about it, the government spends an awful lot of money on this:
‘Single-family home sales in Tampa Bay dropped 5 percent compared with October 2012, listing data show. And though median prices have slid since their summer peak, they remained 16 percent higher than last year, at $155,500.’
‘The big wild card slowing the market, real estate agents said, is the Biggert-Waters act, which has led to steep flood insurance premium hikes for homes with subsidized rates and has discouraged prospective buyers.’
http://www.tampabay.com/news/business/realestate/flood-insurance-woes-and-fall-slowdown-cool-tampa-bay-housing-market/2153482
It would seem that what’s healthy would be self sustaining for all participants (nearing equilibrium),
That was the word that came to mind for me, Ben: equilibrium.
A market in equilibrium, with a reasonable volume of transactions occurring, not being distorted by outside influences—that is my definition of a healthy market.
Frozen liquidity at a temperature of absolute zero is an equilibrium state.
Frozen liquidity is an oxymoron.
Howz it going Ol’ Barbara?
Frozen liquidity at a temperature of absolute zero is an equilibrium state.
That’s why I specified “with a reasonable volume of transactions occurring”.
Healthy is when the average home buyer and homeowner regards his house as a home and not an investment. I would add also when ones mortgage is no more than two and a half times his income. But job security is very scarce these days. Borrowing g for a house is extremely foolish in this era of decline in financial security.
I advise any 20-something that if he wants to get wealthy the fastest, stick to renting a small space, and even rent a room if you can. The money left over you buy stock index funds.
If you just want to have a house as soon as possible, forget about becoming wealthy.
The way I translate your comment (which I agree with) is that a healthy market is one that can quickly react to stronger demand (for whatever reason) with more supply, and likewise, stop production quickly if demand weakens. Thus, keeping prices fairly stable, without shortages, or excess product.
Government subsidies impact demand, and thus increase prices generally (no matter what the industry). However, over-regulation by government can impact the ability to add supply when needed.
Take away the subsidies, and you decrease prices generally, but you don’t necessarily make a market “healthy” just by removing subsidies. You still need to make sure the market is one that can quickly react to increasing/decreasing demand by increasing/decreasing supply.
Take away the supply-restricting over-regulation, and you move closer to a healthy market.
Liar,
I don’t think we have to worry about “stronger demand”….. not in our lifetime anyways.
“what’s healthy would be self sustaining for all participants (nearing equilibrium)…”
That would require a stable supply of money and credit.
“Nassau County residents seeking to make their dream of buying a house a reality are invited to apply for a share of $500,000 in federal HOME Investment Partnerships Program funding.
“Home ownership and affordable housing is vitally important to keeping families, seniors and young professionals on Long Island and is critical to economic stability and continued growth,” Nassau County Executive Edward Mangano said in a news release Tuesday.
He went on to say that residents who meet the U.S. Department of Housing and Urban Development eligibility requirements “will have an opportunity again this year” to own a home.
In the previous year, 31 home-buying residents were helped under the program, receiving up to $20,000 toward down payment and/or closing costs.
Applicants must be first-time home buyers with an annual income of at least $30,000.
There are maximum income guidelines, such as those for a family of two, who cannot exceed an income of $67,800; of four, $84,700, and eight or more, $111,850.
Applicants must provide a minimum down payment of $3,000, be able to secure a mortgage and attend a mortgage counseling session. Houses must be in the county and have appraised values of less than $396,625.01.”
http://www.newsday.com/long-island/towns/long-island-now-1.1732330/community-roundup-news-for-prospective-and-current-homeowners-1.6477564
these number guarantee default
Default is the new American Dream.
“these number guarantee default”
+1 Unfortunately the average buyer just doesn’t realize that until his Chinese made chit is out front by the curb and his other half is riding a different pony.
‘the average buyer just doesn’t realize that until his Chinese made chit is out front by the curb’
Or in my dump trailer. It’s incredible the amount of Chinese crap I take to the dump.
At least the donkey has to take a mortgage counseling class. I’m sure they explain what life is like when the mortgage payment is larger than takehome pay. They probably give you a fancy certificate at the end of the training, which you would want to frame and display at the entry of your dream house.
‘Regina has not been alone in experiencing low vacancy rates. Canadian cities have been experiencing low rates for a relatively long time. In 2012, cities like Vancouver, Winnipeg and Toronto had vacancy rates of 1.7 per cent, and Calgary and Edmonton had rates of 1.3 per cent. In fact, out of the 33 metropolitan cities that Statistics Canada tracks, 23 of those had vacancy rates under three per cent.’
‘At the same time, whenever a new purpose-built rental property in just about any Canadian city is completed, it is filled with tenants almost immediately. So why do we see such a lack of investment in rental housing stock in the country?’
‘The reason is that the current Canadian tax regime treats investment in new purpose rental properties very differently than investments in other markets, which ends up actually creating a strong disincentive for investment in new rental housing. As a result, the value of existing rental properties is artificially inflated, vacancy rates are low, and rents are too high.’
http://www.leaderpost.com/homes/Creating+investment+rental+housing+would+boost+affordability/9203766/story.html
one of her Memorial-area listings, a townhome priced at $995,000, drew offers from 11 bidders. ‘It’s never been like this before,’ says Turner. ‘There’s not a part of the city that’s not doing well.’”
I guess what the CEO of Toll Brothers said is correct…I thought Houston was a affordable place to live relative to housing costs…
It WAS - before the influx.
you forgot socialist wanker= subsidized housing market
There it is.
“‘This year we’ve seen Baby Boomers on the move, and they are doing what we call ‘right-sizing’,’ said Erika Hall of Keller Williams Realty in Worcester, ‘who are looking to move out of a large family home now that they have two or three empty bedrooms and are paying to heat a much larger house than they need.’”
“With a number of ‘boomerang children’ of Generation Y moving back in with their parents after college, a greater number of larger homes will be on the market in the coming year. ‘A new construction trend we’ve seen this year is multi-generational homes with in-law suites,’ said Hall, ‘We are not sure who will be absorbing these homes already on the market.’”
————————————————————————————–
Didn’t I just state this a few days ago? (I did)
25 million excess empty houses.
Another 35 million houses have already started to trickle into the excess-empty housing category.
What can I tell you? What can I say? You already know what to do.
Oh…. you’re on the hook for $__-hundred thousand on a house?
You’re screwed.
Renting is freedom. With money left over to buy investment wines.
There is a huge incentive to have fewer bedrooms when the kids “grow up”. They are less likely to move home every time they hit a speed bump if a tent in the backyard is all that is available.
What about that office for dad, the sewing room for mom, or the eBay packing and shipping and photo studio? Those spare bedrooms won’t go unused.
rms- Space is a nice lifestyle. We love it as well.
Ben
You aren’t kidding about Chinese crap.
At this point, if it isn’t a consumable, I don’t buy it.
Holiday time is about memories and events.
Love the music and lights. Empty boxes sit under our “reusable” tree.
Is Lester Appleton Yun a liar?
“Empty boxes…”
Seems particularly fitting. Tears of Joy to follow.
As for not buying stuff, didn’t you back the Brinks truck up to your house?
Those spare bedrooms won’t go unused ??
They do around here I tell-ya…The Mrs. & I are in the planning stage now for a downsize right now…
HA, I think you would enjoy this:
Canadian Real Estate Bubble
http://www.youtube.com/watch?v=ipmH0RHQ4ec
Those floor joists remind me of an I-beam because the center portion of the rib is where the neutral axis exists, the dividing line between compression and tension, but it doesn’t add to the strength. When installed and loaded the upper portion against the floor is in compression while the lower half is in tension as the joist experiences deflection.
Imagine holding a piece of packing foam shaped like a 2 x 4, and bend it slightly like a smile shape; the upper half is in compression, and the lower half is in tension. The neutral axis contributes nothing to resist deflection.
That said, the Canuk’s are f**ked, but don’t know it.
I think the similarities with structural steel end with the top and bottom flange. Wood beam joist are only as strong as the adhesive binding the flanges to the web.
BTW, beam joists are quite common now.
“Wood beam joist are only as strong as the adhesive binding the flanges to the web.”
+1 Totally agree.
I’ve seen this kind of construction here on a lake cottage. Building dragged out for a couple of years and the piles of those chipboard beams were just sitting out in the rain. It didn’t look to me like they used waterproof glue. They got put in though, all frayed and delaminating.
“They got put in though, all frayed and delaminating.”
That’s terrible.
I imagine the OSB rib is fairly robust, but like HA said, the adhesive that connects the flanges to the rib is the Achilles heel.
Not too robust when the chips aren’t glued to each other!
It’s a crazy world. Cut the materials to the minimum calculated out to the penny and raise the price to four times what a well built house would cost.
Not too robust when the chips aren’t glued to each other!
+1, Blue. I wouldn’t trust the OSB rib either…
Web…. not rib.
My Jaw dropped open when I looked at those houses at those prices although we have our same craziness in area’s around here like Palo Alto…
This post was meant for Bens below…
The Million $ Dollar Crack Shack Mansions of the Vancouver Housing Bubble
http://www.youtube.com/watch?v=wIf4LhaZTh8
that’s a beaut right there. Best part is the last 5 seconds.
I’d sh*tcan every last woodbutcher on site for leaving materials uncovered in the laydown area. Get in your truck and go home. Go.
comment was for link above this one.
“The Million $ Dollar Crack Shack Mansions of the Vancouver Housing Bubble”
LOL! The part about the beam that rests on plywood!
oops - also meant for the one above. “Canadian Real Estate Bubble”
I reposted on FB. My RE cheerleader FB friends will get pissed
Why is it a healthy market when prices for food, fuel, durable goods, clothing, electronics, etc. are all either stable or dropping and volume is up, but housing keeps going up??
I don’t understand why a house with a 30 year old roof and mechanical systems, badly in need of a rehab or teardown, is expected to be worth more now in relative terms than when it was new.
Am I stupid? Or am I just too narrow bandwidth to see the big picture?
I just don’t get it….
‘Why is it a healthy market when prices for food, fuel, durable goods, clothing, electronics, etc. are all either stable or dropping and volume is up, but housing keeps going up?’
I could go into a lot of things, but lets settle on this; if higher house prices were a net economic good, there would have been no collapse a few years ago. The truth is, it’s all a lie. Houses don’t produce any economic benefit in and of themselves. Somehow, the media has bought this concept that houses are the economy. Look at Bernanke; he has made housing prices THE linchpin in his reflation strategy. Higher house prices make us poorer, just like food, fuel, ect. In other words, we’re being lead by idiots.
This is what scares me the most. This is becoming a bigger chit sandwich, and at some point we’re still looking at taking a big bite.
‘what scares me the most..this is becoming a bigger chit sandwich’
Me too.
Me three
I don’t buy for a second that the PTB believe this is sustainable, either.. and the media will pump (pimp) whatever message they are told (sold)..
my advice to my kids right now is to keep a very small footprint for a while until the ponzi unravels again…
“Am I stupid?”
Naw, dude. You’re smart You’re here.
Welcome.
“Am I stupid?”
I see you swallowed the red pill; that is why you are here. Welcome aboard.
http://en.wikipedia.org/wiki/Red_pill_and_blue_pill
China’s State Council’s Think Tank: The Property Bubble Is Bursting
http://www.youtube.com/watch?v=cl0_NOVGP8I
Oh that one is sweet. A must see. Too bad there is no text narrative on it.
The understatement of the HBB blog: [China's] “property bubble is bursting.
Awesome video
Oh dear.
‘Some of the nation’s hottest housing markets over the past year are cooling off as buyers balk at paying higher prices while faced with rising mortgage rates, according to a Wall Street Journal survey of market conditions.’
‘There’s been a great deal of sticker shock,” said John Wheaton, vice president of mortgage lending at Guaranteed Rate in Costa Mesa, Calif. In Southern California, Mr. Wheaton said, “we’re seeing more price reductions than we are price increases.’
‘Certain areas have already become a buyers’ market, and the entire market will be there by early next year,” said Mike Orr, a housing analyst at Arizona State University in Tempe.’
‘In Sacramento, for example, the number of homes for sale shot up 93% in October from a year earlier while sales fell 25%. In Phoenix, sales were down 14% while inventory was up 15%, and in the Las Vegas area, sales were down 13% while the number of homes for sale without any offers was up 73%, according to local real-estate boards.’
http://online.wsj.com/news/articles/SB10001424052702304607104579210001500861862
If the price of a house is 25 percent more this year than last year it isn’t a healthy market and nobody should buy. One year shouldn’t change the price any more than 5% plus or minus. More than that and it ain’t healthy.
Yet everyone is crowing about the places where this exact same phenomenon is going on.
‘One year shouldn’t change the price any more than 5%’
I agree, and this run up should have been sounding alarms all over the place. What we got instead was pouring fuel on the fire.
I would like to hear people talk about house prices a lot less. That would be a healthy housing market.
‘(Reuters) - Several Asian and U.S. banks are working around new U.S. regulations on derivatives trading aimed at preventing a repeat of the 2008 financial crisis - moves that are legal but leave markets in the region exposed to a risky liquidity shortage, traders and bankers say.’
‘U.S. regulators are pushing to move much of the $693 trillion over-the-counter derivatives market to new electronic platforms known as Swap Execution Facilities (SEF), which will increase transparency and help prevent the recurrence of the 2008 crisis. The SEFs started trading on Oct 2.’
‘But dealers estimate only 10 to 20 percent of Asia’s daily market turnover in currency and interest rate derivatives - estimated by derivatives traders in the region at about $20 billion - has moved to the SEFs with the rest being settled in the wider market or bilaterally. The fragmentation of liquidity has made it difficult for investors to hedge portfolio risk, especially for large trades.’
http://finance.yahoo.com/news/u-derivative-rules-leave-asia-markets-vulnerable-210856241–sector.html
$693 trillion. I’m sure that nothing could go wrong there.
There are more claims on stuff than there is actual stuff. The Mother of all Musical Chair games.
No no…. these are claims upon the previous claims on actual stuff.
….. $693 Trillion eh?? My God this is going to be an unimaginable disaster of epic proportions.