Sellers ‘In A Scramble’ For Buyers: Appraiser
A pair of reports on the housing slowdown. “Buying a house in New Jersey this spring? You’ve got a lot more choices than buyers have had in recent years, according to a new report from an appraiser who tracks the housing market.”
“The inventory of unsold homes was up 71 percent in April compared with April 2005, according to Jeffrey G. Otteau, an East Brunswick appraiser.”
“While buyers used to bid against each other for houses, now sellers are ‘in a scramble to gain the interest of buyers,’ Otteau wrote in his latest report. The report echoed his findings for the first quarter.”
“Sales contracts in April ran 20 percent below the April 2005 level, and there is now a seven-month supply of houses for sale in the state, up from a three-month supply in the spring of ‘05.”
“The most expensive houses sit on the market the longest. A house costing more than $1 million is likely to be on the market for an average of 12 months in Bergen County, 24 months in Passaic County, 11 months in Morris County and 40 months, more than three years, in Hudson, Otteau estimated.”
“After doubling from 1999 to 2005, North Jersey housing prices had to cool off at some point, because there’s not an endless supply of buyers able to pay half a million dollars for a starter house.”
The Star Tribune has this update from the Twin Cities. “Dogged by too many homes for sale and higher mortgage interest rates, Twin Cities-area home builders last month posted the steepest decline in construction activity in at least a decade. Last month, home builders were issued 769 permits to build 1,052 new units. That’s a 27 percent decline in permits and a 44 percent drop in new units from May 2005.”
“‘What we’re seeing is a supply-side response to current market conditions,’ said Curt Swanson, president of the Builders Association of the Twin Cities. ‘With all of the homes on the market, potential buyers have more options.’”
“The number of homes for sale in the Twin Cities metro area has been at record levels. Inventory for sale is more than 40 percent higher than last year. Pending home sales have fallen 18 percent.”
“‘Like every industry going through a slowdown, everyone is a little concerned,’ said Wendy Danks, marketing director for the Builders Association. ‘Our members have to watch their inventory and should be selling rather than taking orders.’”
OT …interesting article by Gary Schilling at http://www.forbes.com/forbes/2006/0619/168_print.html
“Even a 20% price decline will be devastating for many homeowners. On average, those with mortgages have 37% equity in their abodes. Of those who borrowed or refinanced in 2005, 29% have zero or negative equity, calculates First American Real Estate Solutions.
A house-price collapse will be far worse than the 2000–02 bear market on Wall Street and will bring a serious global recession. Half of households own stocks or mutual funds, but 69% own homes.”
These people have an amazing grasp of the obvious - well after the fact when there isn’t much they can do about it.
Why I agree its obvios now… do note he informed his newsletter subscribers back in October of ‘05. Not many financial advisors or economists would have informed people of this back then.
Neil
hasn’t Shilling been writing about the bubble bursting for a while now? at least before the MSM picked up on it.
Yes he has. Here is one from 9/2005. He is also predicting deflation.
http://www.forbes.com/archive/forbes/2005/1003/110.html;jsessionid=n6rEQcJEpm7TsN3Q?token=NiBKdW4gMjAwNiAxOTo0Mjo1MyArMDAwMA%3D%3D
As a somewhat minority voice here, I am for deflation. Painful though it would be, that is where I’ve placed my bet. Worked for Japan, all things considered.
Clarification: most of the 69% who “own” homes actually rent them from the bank until they have paid them off. IMO, unless you hold your title free and clear, you don’t own anything.
*own* has nothing to do with who has the majority stake in the asset but whose name the property is *listed to*.
Both good points!
Though the way I see it is, even if the house is *listed to* Joe Schmoe, if Mr. Schmoe can’t make the payments to the bank, the bank will foreclose on that house, regardless of it being listed to him.
Even if you hold free and clear title, you still rent it from the city/county - if you don’t pay property taxes, they will throw you out.
And even then the city can pull a New London vs. Kelo on you.
I saw that today what is that all about?
deflation guy…
Amen. The bank owns ‘your’ home. Home ‘ownership’ is a myth propagated by the banks to make us feel better about renting. Only advantage to ‘owning’ (unless you pay it off) is painting to your tastes. Biggest hoax ever perpetrated on the American public. And since I’m on a rant, the ‘tax break’ for the interest is also more for the banks than the borrowers. With the standard deduction at $10k, that covers a lot of rent. Bush makes noise about eliminating that ‘tax break’ but I don’t think the banks will go for it, unless they are ready to move into the open with their ownership of everything and just let us serfs rent from them.
c’mon. try selling the house you are renting from a landlord. and if by any chance the home titled to you got equity in it, you get to keep some, if not all of the profits, when you sell it.
“While buyers used to bid against each other for houses, now sellers are ‘in a scramble to gain the interest of buyers,’ Otteau
_______________________________________________
Sellers MUST feed the squirrels!!!
these squirrels?
Anyone with a good heart would feed them.
pretty soon they’ll be shooting them to have them with their Ramen noodles.
Yeah, we fed the squirrels… to our kids!
THOSE ARE THE ONES. Linda Gao, wherever you are, if I were rich enough to buy that property in the future, I would eat every one of those squirrels. Ya hear me, Linda? Am I an animal? No, not at all — those suckers are probably so well fed they will be the tastiest squirrels in the Bay Area. Sorta’ like “grain-fed.” I would make a nice Merlot sauce for one of them, something chipotle for another, a gingered plum BBQ sauce for the third… you get the idea. A wonderful, decent sendoff for each. Will send you the bones, if you wish. Cheers, Linda.
These late-dumping bagholders may survive to one day benefit from this wisdom, “I made my money by selling too soon. ” Bernard Baruch (1870-1965) financier & economist
Yep, that’s the way I look at things. I am always one of the first to leave the party and rarely get all of the profit, but what I do get is firmly in my hot little hand.
BTW, PnF trendline on the HGX in place since 10/2002 broken! Wow!
txchick57,
Well I didn’t know you were a Dorsey Wright disciple? I’ve followed them for years and for the most part it has served me well. Nice call.
What is Dorsey Wright …any link? Google did not though up any Investment Guru or something!
Love it when you talk dirty!
“On average, those with mortgages have 37% equity in their abodes.”
So a 20% drop in housing would wipe out half the equity of all mortgage holders, leaving half of them under water.
nope. a 20% drop will simply mean *on average* those with mortgages will be left with 17% equity in their abodes. it *may* be true that half of all mortgage holders will be underwater but we do not know that from the statement.
The still have 37% equity left
Ahh yes…. NJ….. But the question is, will the weight of exloding housing inventory, skyrocketing fuel prices be enough to keep the creepy, clueless NJ cretins corralled in their cesspool and prevent them from spreading their disease to other parts of the country?
Time will tell.
Are you saying that the NJ people are not as Crisp as those that live in VT?
Theres my angry little man.
More of an amused bystander.
I compel you to post. Tis’ cute.
Hey Lingus, where dost thou hail from?
gee, replace the word *NJ* with *California* and it will work just as well.
Lingus…
Might I ask just what in the world it is you have against the residents of New Jersey? In almost every post I see from you regarding NJ, I can feel the disgust radiating off of you. Heh.
the lingus likes to rattle cages
Even if only his own.
His tolerance on display stems from the fact that he’s very liberal.
Liberals are very tolerant of others and open minded, as “The Lingus” demonstrates.
Lingus is a liberal?
More of a crank by avocation. Hating the administration merely puts him in the company of 65% of his countrymen and 95% of the rest of the world… that hardly makes him liberal.
Lingus is a “synthesist.” The polite definition usually is “devil’s advocate.” A synthesist usually will respond to “Nice day, isn’t it?” with “No, it’s too (choose your anti-phrase).” Lingus almost certainly votes for liiberal candidates, socialist if possible, but likely will argue with you if you try to pin him down about that. He is what is called in its most abbreviated term, a contrarian. He thrives on conflict and does not like harmony. Doesn’t mean he is bad or good, just that it’s the way he is.
New from Phoenix
http://www.azcentral.com/business/articles/0606homesales0606.html
I remember when Ben asked his readers to make-up/imagine/share what the stories hitting the news, about real estate, would sound like in the future. These stories are starting to sound an AWFUL lot like the ones the readers came up with……it’s like a deja-vu reading these. And it seems like this is all happening VERY fast. It seems like I was just reading all the fake stories!!!!
PS I’m on a mailing list and this note was in my email this morning:
_________________________________________________________
Good morning-
I’m just wondering if anyone in the group has ever tried to sell their
home “For sale by owner.” My husband wants to try this route prior to listing with an agent. Any thoughts on this? my problem is that i
just dont know where to list. Any suggestions? I’m wondering if it’s
just a waste of time? With the market being so slow right now, i
wouldn’t even consider this route except that our house in so
inexpensive that it might draw a few inquisitive minds to us (were
listing under 400,000). We’re local- does anyone know of local papers, etc?
___________________________________________________
I think by local they mean the Santa Clarita Valley in California….since this is were the group is from.
mspenelope - It actually feels like “dejavu all over again” to me. If you compare the reader’s shared articles from the late 80s - mid 90s crash with the “fake” articles people posted on this blog along with the “real” ones we’re seeing right now it’s mind boggling.
How could something so obvious have escaped so many for so long?
“How could something so obvious have escaped so many for so long? ”
Huggybear….it’s still happening !
I was talking to an investor at an open house this past Friday and he was looking to buy properties in Manhattan Beach …thinking that prices would stay as they are. This was NO novice. He appeared to be late 60’s early 70’s and told me he had LOTS of experience buying and holding properties for rent….. but when I questioned him about buying in this market he said “no problem..the economy is great…companies are making LOTS of money…..etc. etc.” He actually pointed to his shirt and said stuff is so cheap and affordable now..people are very happy. He said it was different in the last real estate bust and brought out the ‘defense job theory.’ When I pointed out that THIS time we had the same scenario waiting to happen EXCEPT that this time it’s going to be the ‘real estate’ jobs (not to mention all other related dove-tailing going on) instead of the defense jobs….. he just shook his head as if to say….”why worry about that…. it doesn’t matter…it’s irrelevant” BTW VERY nice man…. drove off saying “you have to think positive!!!!”
Little did he know ….
I AM thinking positive ……. prices WILL crash !!!!!
HOUSDAQ.COM
Todd Harrison
Jun 16, 2005 2:59 pm
Vuja De!
With equity indices slinking along the slippery slope, the fevered fervor seems to be focused on housing these days. We have a pretty tight community here in the ‘Ville and my mention of unavoidable acne last week seemed to rub some the wrong way. “How can you opine that the homebuilders are gonna break out when you’ve repeatedly said that we’re in a bubble?” That’s exactly the reason they can—and did—break out, Mon Frere, and it warrants a bit of discussion on another slow summer day.
While the names have changed, the game remains very much the same. Once upon a time, the “new economy” was all the rage and profitless stocks jumped 10, 20, 50…sometimes 100 handles in a single session. I remember watching the price action incredulously, knowing full well that when the schvitz finally hit the fan, there would be alotta bitter pills and sour pusses. That came full circle, in some instances, but as a function of Elmer’s incessant aid, the bubbles morphed and migrated into other appetizing arenas.
There’s a bull case for housing, of course—if there wasn’t, the collective psyche wouldn’t embrace them as they have. There were also alotta smart folks who rationalized stratospheric dot.com’s, shifting their metrics from page views to eyeballs to eyelashes until they found some sorta rhyme to justify their upside reasoning. The process seems silly with the benefit of hindsight, yet we’re seeing the same sexy sirens in the current real estate mania. Until the flippers have no “out,” the Ponzi scheme will remain a theme and the belief system will remain in tact.
Where are we on the bubble curve? It’s impossible to ascertain and I’m not brave enough to venture a guess. What I will say is that the same cultural characteristics that existed near the top of the tech bubble are firmly in place. There is a confident bravado among real estate professionals and the retail consumer has already embraced the “new housing paradigm.” It’s akin to the day trading phenomena that engulfed Wall Street back in the day but the vehicles and vernacular have shifted in kind. Instead of upgrades and secondaries, we’re seeing open houses and second homes.
At a point, we will saturate and the debt laden, financed-based economy will begin to unwind. The key to our collective success is defining how far along we are in that process. Remember, alotta very smart investment professionals correctly identified the speculative excess in tech but were early on their bet. As the only difference between being right and being early is whether you’re there to collect—and most short funds were squeezed out before their ship came in—there is no solace in after-the-fact reporting. I will only ask that you recognize the warning signs and respect the fact that irrational environments often outlast solvency.
For my part, and I’ve been wrong in my real estate approach, I’ve opted to rent rather than own. I know that most Minyans aren’t afforded the luxury of that choice but I get a ton of mailbags from folks who “see” what’s happening and have opted to punt their homes for alternative digs. As with stocks, these decisions are subjective and unique to the person and the place. But for what it’s worth, my sense is that these proactive sales will, for the most part, look very smart when we look back in time and review our history lessons.
R.P.
No positions in stocks mentioned
Report from LA: About 10 new listings in one week in my search area (Los Feliz-Silver Lake-East Hollywood Hills). There seems to be a spike in pricing but almost nothing is selling. Out of over a hundred listings on the MLS, only 2 were shown as “looking for backup.” I attribute the spike in pricing (some of them insanely ridiculous) to unmotivated sellers simply trying to see if there’s any more fools left out there.
Boise flipper special with computer generated lawn! http://boise.craigslist.org/rfs/168401326.html
This neighborhood is a dump- and its new! This type of cracker box was selling for 140k last year and now 189k? This flipper is crazy. Its funny that the yard is “computer generated because most of the yards in this neighborhood are trashed out with weeds and half-dead lawns.
That house is the antithesis of “curb appeal.” Ugh.
Nice computerized sidewalk too, and all those “Rough Ins” for things they ran out of money to buy. What a feature, extra holes in the walls.
Jesus that’s ugly. And look at all the stack vents on the front of the house.
Computer generation? recently had a customer dissapointed that a stone paver he ordered didn’t look anything like the computer generated version in the brochure.
I wonder if Craigslist can handle animated gifs? It would be funny to have Michael Jackson walking down the sidewalk with the squares lighting up.
If your house won’t sell, mspaint.exe to the rescue!
Brandon,
This is hysterical! Seriously. If the overvalued blogspot had not been shut down this would have been the perfect entry! How is it that one picture shows a “hole” where the kitchen goes and another shows us a completed kitchen? What upgrades? What I see is basically a mobile home with a fake yard. Good eye my man. Keep it up!
Upgrade options with elderly owners in mind. Excellent schools.
Huh? Is the house for seniors or for young families? Why would the elderly care about the quality of schools? Most elderly don’t want all “those damned kids” nearby, anyway.
T-111 w/ junk windows and crap fenestration.
POS…Worth $89k
This house isn’t the worst example but every time I see a house on a narrow tract with a giant garage dominating the front aesthetically, I feel like I am getting “mooned”. Maybe its Freudian.
The area is not that bad, but Hubble Homes (aka “Rubble”) should not be selling for $189k. And why don’t the sellers just pay someone to mow the lawn, the photo looks ridiculous.
On first glance I really thought it said “Bubble homes”.
This just hitting the tape. Are lawmakers getting ahead of the curve to keep flippers, mortgage brokers and RE agents off welfare?
___________________
NEW LAW COMING FROM CONGRESS — AMERICANS WITH NO ABILITIES ACT
WASHINGTON, DC - Congress is considering sweeping legislation, which provides new benefits for many Americans. The Americans With NoAbilities Act (AWNAA) is being hailed as a major legislation by advocates of the millions of Americans who lack any real skills or
ambition.
“Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society,” said Barbara Boxer. “We can no longer stand by and allow People of Inability to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they do a better job, or have some idea of what they are doing.”
The President pointed to the success of the US Postal Service, which has a long-standing policy of providing opportunity without regard to performance. Approximately 74 percent of postal employees lack job skills, making this agency the single largest US employer of Persons of Inability.
Private sector industries with good records of nondiscrimination against the Inept include retail sales (72%), the airline industry (68%),and home improvement “warehouse” stores (65%) The DMV also has a great record of hiring Persons of Inability. (63%)
Under the Americans With No Abilities Act, more than 25 million “middle man” positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.
Mandatory non-performance-based raises and promotions will be given, to guarantee upward mobility for even the most unremarkable employees. The legislation provides substantial tax breaks to corporations which maintain a significant level of Persons of Inability in middle positions, and gives a tax credit to small and medium businesses that agree to hire one clueless worker for every two talented hires.
Finally, the AWNA ACT contains tough new measures to make it more
difficult to discriminate against the Nonabled, banning discriminatory
interview questions such as “Do you have any goals for the future?” or “Do you have any skills or experience which relate to this job?”
“As a Nonabled person, I can’t be expected to keep up with people who have something going for them,” said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, MI due to her lack of notable job skills. “This new law should really help people like me.” With the passage of this bill, Gertz and millions of other untalented citizens can finally see a light at the end of the tunnel.
Said Senator Ted Kennedy, “It is our duty as lawmakers to provide each and every American citizen, regardless of his or her adequacy, with some sort of space to take up in this great nation.”
Bushies and his cronies will need some way to eek out a living. May as well be the AWNA.
“Eek” is what you say when you see a mouse, you meant to use the word “eke”.
Also, the above was a joke. Lighten up.
garcap,
Are you a fan of “The Onion”? They could use more parody writers like this! Funny stuff.
I believe that IS from the Onion.
it sounds like the onion…it’s been going around on email…that’s where I picked it up…
garcap
Excellent..
Jokes are supposed to be funny. That was just stupid.
This organization already exists…It is our
Government
Garcap — funny. Thanks for the work to write that.
OT. This is a real ad from Guardian Loan Company in an Albany NY newspaper. “Actors wanted” I can die happy now, I’ve seen it all!
http://412.careersite.com/candidate/processcandviewjob?docid=A0220-0D15&source=search&resume-title=
Please to notice the difference in the context and tone of so many of these RE “professionals”. “NJ prices had to cool off at some point b/c there’s not an endless supply of buyers able to pay half a million dollars for a starter home”.
Let’s break it down just a little:
So only NJ’s “prices” had to cool? You’re unaware of their being problems anywhere else in the U.S? O.K that’s fine.
“some point” What point? Which point? Oh, some point! A point that you as an appraiser you couldn’t be expected to identify until it did in fact implode. This is how you make your living isn’t it?
“endless supply” Well yes there was. There certainly was. How else could prices have gotten bid up so damn high?
“buyers”? I’ll leave that to you guys.
“able” That’s one way of putting it. How about, lead to believe they were “able”?
“half a mil. for a starter home” Statements like this are simply yet another attempt to deflect blame. Don’t look at me! I can’t be held accountable if these buyers are crazy! Look Jeff, if your appraisals even once had some sobriety interjected we wouldn’t be here now would we!
Folks here are pretty sensitive to what my father called “massaging the language” but many aren’t. Spread the word.
Look Jeff, if your appraisals even once had some sobriety interjected we wouldn’t be here now would we!
No sobriety for Jeff…Hunger maybe if he didn’t punch the value ticket for the appraisals some dirt bag L/O was feedin’ him.
Today’s architects apparently think butt-ugly sorethumb garages should be the main selling point for their shacks.
But it’s more important you see my leased mercedes before you see the furniture I bought on Credit !
“Approximately 74 percent of postal employees lack job skills, making this agency the single largest US employer of Persons of Inability.”
I don’t think it’s a joke.
“‘What we’re seeing is a supply-side response to current market conditions,’ said Curt Swanson
See, supply side economics do work!
for all those sophisticated investors/short sellers here. have you guys noticed the REIT indexes haven’t gotten nearly as clobbered as the home builders? maybe that’s a new opportunity?
Yes, I did notice that. Some of them have pretty lofty PE ratios.
What’s up with them?
Two different worlds
I must be the only person with a positive impression of the post office, I’ve had postal carriers go way out of their way to get mail to me.
I like the post office in general. They are pretty good for a 32-cent stamp.
However, my local office is pretty disappointing. Slow and uncaring in general. I would also prefer other companies to be able to deliver into mailboxes… government enforced monopolies are bad, mmmk.
32 cents was about 5 years ago.
Duh, you’re right. I think that was the last time I had this discussion.
32cents? Oh, yeah. That’s the CORE price. The actual price you pay is 37 cents, soon to go to 39 cents. Right?
My local post office is very fast, efficient, and neighborly. I like the folks working there a lot. It has a nice small-town feel to it - well, it is in a small-town inner-ring suburb. The building was built by the WPA, so it’s beautiful and historic, too.
As for the post office that services my office - I get heavy correspondence from all over the world, sometimes with the most creative addressing, yet the post office gets it delivered. Sometimes the packaging (especially from third-world countries) is very flimsy and falls apart in transit, yet the post office gets it all put back together and delivered. I hear complaints about lousy performance and poor service from USPS, but I have had consistently great service from them. Maybe it’s the Midwestern work ethic (grin)…
Unlike Homoaner, I get almost nothing from anyone, in the mail. What I do receive, I am grateful for, except of course the exhortations for yet another credit card. My mail carrier has his own airboat and his own hunting camp in the swampland of Florida, and I enjoy BSing with him regularly about hunting, fishing and Yankees. (The capital “Y” was a concession to the generally polite nature of Ben’s blog/bloggers.) I believe, after many years of experience with the postal service, that “quality” tends to relate to the particular staff of your post office at a particular period of time, and ditto for your carrier.
My experience with the Post Office is that the letter carriers work like dogs. It’s the molassas in January clerks at the service counters that are more likely to be a problem.
“After doubling from 1999 to 2005, North Jersey housing prices had to cool off at some point, because there’s not an endless supply of buyers able to pay half a million dollars for a starter house.”
DUH….Like this is rocket science????
How much is this guy charging for his appraisals anyway????
Last time I looked appraisal management companies were offering scraps @ $35.00.
Most of these johnny-come-lately appraisers are buffoons.
you got that right. especially wells fargo’s supposed independent management company. they pay the appraiser squat and charge an exhorbitant appraisal fee and pocket most of it. no wonder they tell the appraisers not to discuss values or fees with borrowers. i bet most people don’t know that management companies have taken over the appraisal business from the large lenders. its good in one aspect that we don’t deal directly with the branch offices and loan officers. the drawback is that appraisers are treated like cattle in rawhide. keep those doggies rolling. get em up get em out, rawhiiiiide (24 hour turnaround times). or its see you later, we’ll just go to the next appraiser. if its the vanderbilt mansion in newport, ri, they may give you an extra 24 hours. why do you think my handle is appraiser boy.
so where are you located hd74man? are you an appraiser? just wondering.
I’m in New England with residential certifications in ME, NH, and MA…
Been in the biz for 21 years with 2 college degrees, and credentials as long as my arm.
My business largely went in the tank around ‘01, when the state appraisal boards licensed hordes of incompetants.
The entire profession now reeks of corruption.
Just saw a book at B&N with a title saying “BECOME A RESIDENTIAL APPRAISER-6 figure incomes with a HS education”.
But I won’t work for AMC dogshit fees and I call a spade a spade. Couldn’t buy me for a milllion bucks.
Glad my name isn’t on “thousands” (as noted in one of Ben’s postings) of FNMA 1004’s for the last 4 years ’cause the gov’t will come lookin’ for scapegoats, which will be the appraisal profession because it’s got no political muscle.
The post office has too many inability. They managed to lose my checks I have been waiting for because of the inability to read a change of address for my wife. My mail then got a label “No address found” - I never requested a change for mine. Finally got some of it. Some still missing - 2 months later. Not too pleased with the results there.