Sellers Seem To Be Nervous
The Fresno Bee reports from California. “A master-planned Fresno community west of Highway 99 is on hold for what could be another decade. Developer Darius Assemi, president of Granville Homes, said the timing isn’t right for his Westlake development. Once the pieces come together, Assemi hopes the real estate market will also have recovered from the dismal housing downturn. Assemi said he believes the market is only halfway through the recovery. ‘We need to develop Westlake at the beginning of an economic recovery cycle,’ Assemi said. ‘Once we break ground it takes two years to get it off the ground. We want to be at the beginning of the next cycle and have product ready to go. We believe we have missed the boat on this cycle by at least two years.’”
The Seattle Times in Washington. “The median price of single-family homes sold last month in King County was $447,250, about 3 percent lower than in September, the Northwest Multiple Listing Service said. After local sales came to ‘a screeching halt’ in August, they picked up a bit in September before slowing again in October, said Bob Papke, a RE/MAX agent who covers Issaquah and Sammamish. ‘Our second selling season was pretty short-lived,’ he said. ‘Buyers have gotten a lot more picky in terms of what they want.’”
The Boston Business Journal in Massachusetts. “The market’s third-quarter downshift was apparent in communities from Cape Cod to the Berkshires, as sellers in high-end as well as lower income areas of the state resorted to deep price cuts to lure buyers their way. According to Zillow, some 42.7 percent of all homes listed for sale saw a reduction in their list prices during the three-month span that ended Sept. 30, while the average price cut per listed home was 5 percent. In the Western Massachusetts communities of South Chesterfield and Brimfield, more than 70 percent of listed homes saw price cuts in the third quarter. In Lawrence, where 49 percent of listed homes saw pricing reductions, the average cut was 8.8 percent. Further south in Newton’s tony Nonantum neighborhood, some 38 percent of listed homes combined for an average price cut of 8.2 percent.”
“Tina Sachs, a broker with Coldwell Banker Residential Brokerage in Newton, agreed price cuts are more common as the year advances, largely due to a dwindling number of buyers. Sachs said that has helped goose the market as it heads into the final months of the year. ‘A house looks a lot different when the price is lower.’”
The Free-Lance Star in Maryland. “Though the third quarter of 2014 saw significant contract activity, with more units sold during any other quarter since 2006, the Fredericksburg Area Association of Realtors urged caution in light of decreases in the median sale price and longer time on the market for most homes. The 2,199 new listings added during the third quarter represented an increase of 6.8 percent over the same period last year and was the highest third quarter level since 2008.”
“‘Agents across the region are reporting a slowdown in market activity in residential real estate sales,’ said 2014 FAAR President Debbie Irwin. ‘While the numbers show continued growth, agents are experiencing a slight softening in the market. Seasonal fluctuations can account for some of the issue, but agents report some erosion in consumer confidence with the continuing stagnation in the national economy and fears about further government spending reductions and how that would impact Virginia.’”
In Maricopa from Arizona. “The average home in Maricopa is taking more than 106 days to sell, compared to less than half the time last year, resale expert Dayv Morgan of Maricopa said in reviewing September sales figures. ‘Sellers seem to be nervous when their home does not sell in the first few weeks, but three months is not very long, said Morgan. ‘Back 2006, they were not selling at all. It does feel a little slow compared to a year ago,’ he said.”
“‘New homes have done better,’ said Amy Jo Schoeberl of Province Active Adult Homes in Maricopa. ‘You can buy a new home for the same or less than an old one.’”
The Reporter Telegram in Texas. “The air is coming out of the balloon. It feels more like blood draining from our face. The price of oil is plummeting, and we’re getting flashbacks to 30 years ago. Are developers building skyscrapers that will sit empty? Will those Inner Loop apartment complexes go Gulfton? Is this panic just an overreaction?”
“Petroleum industry analysts say things are different this time. Fracking wells have a shorter lifespan than traditional oil wells, meaning supply can naturally shrink to accommodate demand instead of flooding the market. Long-term contracts and proper hedging will prevent any sudden corporate collapse. Cost-cutting and new efficiencies mean many wells can remain profitable even if oil continues to drop. Plus, Houston’s economy is more diverse than during the early 1980s. This time, it is different. Famous last words.”
‘You can buy a new home for the same or less than an old one.’”
This is nothing new although it’s far more accurate to say a new house can be had for nearly half the price of a used up 20+year old shanty.
A seller is going to seek the highest price. Everything else being the same, a new house should cost more than a 10 year old house. A 10 YO house more than a 20 YO house, etc. What this situation seems to describe is builders undercutting the price of existing house sellers.
What would cause such a scenario? This gives a clue:
‘Sellers seem to be nervous when their home does not sell in the first few weeks’
It’s a declining market after a huge run-up. The reality is a lot worse than this article makes it out to be.
And adding more inventory that can be sold at a lower price does a double whammy to the comps. You sold a comparable or better house lower and you decreased demand by one buyer.
Contractors can undercut because there just isn’t the cost there in materials and labor.
Colleyville, TX (Fort Worth) Sale Prices Plummet 17% YoY
http://www.zillow.com/colleyville-tx/home-values/
It does appear the market is softening, even declining in some areas. How low will it go? What factors are there to act as drivers?
1) reproduction cost sets upper limit
2) higher interest rates
3) demodraphic changes
What is missing from a typical downturn?
1) foreclosures
2) recession
3) out migration.
If the economy keeps recovery, it will be a slight correction.
You’re backpedalling J._Fraud.
You might be onto something with the reproduction cost. Buying a house at multiples of reproduction cost is mania.
Didn’t foreclosures peak six years after the last decline?
Buying a house at multiples of reproduction cost is mania ??
Its not just the cost of the structure…What about the land and infrastructure ?? How do you “reproduce” that ??
You drill a well and install a septic tank and leachfield, roughly $15k. Alternately you trench to the utilities on the street and tap and install a corporation stop and 3/4″ coiled copper tubing.
Land is cheap. There is a globe full of land and 95% of it goes undeveloped.
Dave is the straight man of the day.
Land in Rye NY, Concord MA, Beverly Hills CA, Enfield area of Austin TX is definitely NOT cheap. Maybe BFE, Antarctica, Compton, Detroit and most other 95% is though.
From HA: “You drill a well and install a septic tank and leachfield, roughly $15k”
Respectfully - I have a question. Methinks that $15K is the wholesale price. How do we janeboxwines narrow the gap between your price (at wholesale) and our price (at retail) -frequently 2.5x the wholesale price?
Makes me ill to see the rapacity of the builders’ and developers’ mafia. Truly, I’d love to see fear in their eyes, in contrast to smug superciliousness.
How do we do it wholesale?
Jane,
I don’t understand why you would have to pay 2.5X for this. I’ve done both directly with local well driller or excavator for HA’s price range. I didn’t go through a middleman developer or such, maybe that is it?
Has nothing to do with builders or developers. Just call a driller like Blue says.
Well
$12-15/ft for well anywhere. And I mean anywhere. Pump, pipe and wire installed, $1600.
Septic
Precast septic tank-$1000-$1500.
Pipe, fittings and splitter boxes-$400 max
Couple triaxles of sand- Maybe $800
Operator on a pigtail 16hrs. $2000 maybe?
Connection to the interior piping is owed by the site (or septic) contractor. If it’s a new structure, the P contractor typically owes 5′ outside structure.
You don’t have to lift a finger yourself. Understand what and specify the equipment you need and get it on paper, then get 3 bids. If you don’t know what you need, pull the standard detail from state or local code.
Too much info. Just look for drill rigs and driller pickups in the area and call number on the door and ask around.
If “land isn’t cheap” in 0.00000000000001% of the globe then you shouldn’t be there.
Peak distress (non-current loan rates–delinquencies and foreclosures) was in the first quarter 2010. I don’t know when peak foreclosures were, but personally, I think peak distress probably coincided with the peak of people selling in distressed circumstances.
Almost meaningless since all those foreclosures have yet to be disposed.
The real question should be “When was peak lending?” I believe that occurred in 2004-2006. Do you see “peak lending” in 2013-2014? Pobably not….people are complaining about the difficulty of getting a mortgage.
No. The “real question” has already been identified and answered.
At what price are people over paying?
Answer: Anything above $35/sqft for a used house.
probably not….people are complaining about the difficulty of getting a mortgage.
Except that standards seem to be getting looser by the day…
Did you read the Seattle Times article? They are sucking the buyers who lost big the last time around back into the game for one more roll of the dice…
“If the economy keeps recovery, it will be a slight correction.”
“Recovery’”! And another sheep is ripe for the shearing.
He already went to the shearing. Now he’s just affirming that winter is not upon him.
‘More folks are living high in El Dorado Hills, Folsom, Granite Bay and other parts of the Sacramento region, with sales of luxury homes jumping 29 percent in this year’s recently ended third quarter, compared with the same period last year.’
‘Median sale price of a luxury home in the quarter slipped to $860,000, off 8.9 percent from the median a year ago and down 6.3 percent from the second quarter, when the median price was $917,500.’
It will be a slight correction.
Hahahahhahahaha. Show me historically where this kind of price run up is followed by a slight correction. The excuses and denials here always follow the same pattern. Big gains coming. Price increases will moderate. Slight increase. Flat. Slight correction …
Crater.
“What is missing from a typical downturn?
1) foreclosures
2) recession
3) out migration.”
Maybe it’s different this time, but to my recollection, the housing crash in the 2007-08 episode preceded your items 1), 2) and 3).
Here’s the problem with that line of tripe from the get-go. There are still tens of millions of defaults and foreclosures still sitting with no indication of what the final disposition is. That’s whats in front of us.
When those tens of millions of houses do clear the market, it will lead to another round. We’ve been schooled in how this works; people will not continue to pay the mortgage on a pig that is worth less than what is owed.
Why do those foreclosures and defaults ever need to be disposed, any more than the Fed’s balance sheet ever needs to be unwound?
You’re right, the order of things was:
1) Crazy lending (NINJA loans, liar loans, option ARMs, etc.), which drove prices far beyond the buyers’ ability to pay;
2) Eventually this unsustainable trend stopped and prices came down;
3) Foreclosures
4) Recession
Good point Whac. +1.
Another good point Rental Watch. I haven’t seen any sub prime financing since 2008!
3% down is subprime J._Fraud.
Jingle Mail: “If the economy keeps recovery, it will be a slight correction.”
Correction:
“If the economy keeps doing what it is doing the coming crash will be worse than any seen before.”
indeed.
You missed my point Pazuzu. The housing marketvis softening, the rapid run of price increases has stopped. My question is about how deep the change will be: minor, deep or plateau?
You know the answer to your question J._Fraud.
“Petroleum industry analysts say things are different this time. Fracking wells have a shorter lifespan than traditional oil wells, meaning supply can naturally shrink to accommodate demand instead of flooding the market.”
LOL, now there’s silver lining: A shorter lifespan for an oil well is supposed to be a wonderful thing to happen to an oil man?
“Long-term contracts and proper hedging will prevent any sudden corporate collapse.”
Somehow I suspect these words mean the investing public is about to get thoroughly lubed up and prepped.
Stay tuned.
It does seem different. Here in my DC Exurb we’ve had two more townhomes go on the market in two different complexes, both just a few doors down from another townhouse currently for sale and greater than 100 DOM. Both of the new townhouses are listed $10,000 below the ones currently for sale. To me it shows Realtors confidence is waining. Instead of the age old “Well, they got x for their house, so you should get x plus 2 or 3 percent because real estate always goes up” they seem to be telling their clients “Your neighbor can’t get x for their house so well list it for x minus a few grand”.
By the way, these are pretty nice townhomes too. Garage, nice kitchen, big rooms…..but still no where near the $380K they are asking for them.
Sean - the ones near me seem to have asking prices of $480-500K, and in one case the prior sale price was $500K in 2008, now on market for $490K today. I suppose they might still come out ahead of a renter due to interest deduction and stuff.
I wouldn’t want to buy because the minute I change jobs I’ll probably want to move close to work so I don’t loose an hour or two a day in a commute.
The guy I rent from is an Indian software dev who now owns a few townhouses (But originally lived in the one I rent.) He has a 5000 square foot house somewhere else that he and the fam live in. He’s doing well.
I’m seeing the asking rents sink a bit, which makes me happy.
3 people have left job to date, one stayed local 2 others moved to the West Coast.
‘Mariposa East, the core development area of the formerly extensive Mariposa community in Rio Rancho, appears to have emerged from a troubled past with its recent acquisition by Scottsdale, Ariz.-based Harvard Investments.’
‘According to the release, Mariposa will eventually have 2,000 homes.’
‘Mariposa’s limbo began just over two years ago when the bursting of the housing bubble caught up with its original developer, High Desert Investment Corp., the investment wing of Albuquerque Academy. The crux of High Desert’s problem was paying off the debt owed on $16 million in bonds sold through a public improvement district to pay mostly for utility systems.’
‘The investment company plans to offer parcels to multiple builders to produce homes ranging in price from around $250,000 to $1 million for custom homes.’
Would welcome ideas on where to buy a second home in North Florida or the states around there. We have had an unfortunate major life change recently and the idea of getting away from our home in New Jersey more often is appealing. It might be nice to have a home in the South just to be able to tour another area more easily, take trips with the dog to historical sites, plantations, etc.
We are a retired couple in our late 60’s. Probably would want to spend $180,000 to $220,000. The priority would be a safe area, single family home, one level.
Thanks for any ideas!
You already have one underwater depreciating elephant in NJ and you want to double down on your losses?
No, the place in NJ isn’t underwater; we’ve been here a long time. We have no money worries for balance of our lives due to pensions and savings and Social Security. Its more about having a way to spend our lives for the remaining years, without getting into a lot of detail.
I suppose the way to start is to rent a house in Florida for a month, maybe February or March, and see if its something we like. Would like suggestions for a town/city.
Then dump the NJ shack for whatever you might be able to get and go rent a place in FL for half the cost of buying.
What is the issue?
We like the NJ house, too. We want to spend part of the year here. We’ll always spend part of the year here.
Then dump it and rent in NJ.
You might like a high end condo in Ft. Myers, FL. You can easily get a month long lease in a secure community like Mira Mar Lakes and have exactly what you are seeking.
Thanks, Jingle. I will look into that. Ft. Myers sounds about right.
I’m curious about your motivation to buy a house as opposed to staying in hotels. If you have a house in any one area, you’ll quickly see everything to see there. With hotels, you could be in a different place every night if you wanted, and for less than property taxes, etc, on a second house. BTW, more hotels accept dogs all the time.
Yes, we’ve stayed in a few places with the dog but you can’t leave him in the room and go out to a restaurant unless it has sidewalk seating and you can’t take him to stores or museums. Maybe it sounds silly to consider real estate decisions based on the dog but we just traded in a sedan for a GMC Terrain because we wanted to be able to put a crate in the car. The dog is important; one of our favorite activities now is taking him to an off leash dog park.
I do agree there are big downsides to buying a house.
^LOL
The dog is important; one of our favorite activities now is taking him to an off leash dog park ??
Better yet is the beach….
You might consider a vacation rental first. There’s vrbo dot com (vacation rental by owner), which would give you the flexibility to “try out” different areas in a house before committing. There’s also homeexchange dot com, which lets you “trade” your house with someone in a different area for a week or whatever. Many people love “The Villages”, which is in Ocala area. It is an over 50 place and the people who live there seem to really like it. If that helps.
Thanks. I’ll do some research on The Villages.
Before looking into The Villages I recommend that you read the book “Leisureville,” by Andrew Blechman.
But I’d recommend avoiding homesexchange dot com.
RV?
Yes to the RV.
My sister and her husband rented an RV a few times when they lived on the west coast. She said it was a lot of work and not at all like home. They’d stay in a hotel every few days to be able to take a good shower.
It probably does make more sense to look for rentals and not be tied down to one place. If we have 10 years when we might be OK making that long a trip, we could spend 2 months every year at very luxury rentals for less than the $180-$220K house and not have the hassle of selling it when we’re 80.
Thanks all. Helped me think that through.
Not to mention, zero maintenance hassles.
No problem.
It depends on where in north Florida you want to live. There are many areas that look like the set of Cool Hand Luke. You’d be advised to avoid them. Then there is the “Redneck Riviera” in the Panhandle. A lot of military retirees, and some beautiful beaches, but you’ll pay a premium for that. I don’t dislike Jacksonville; especially if you have a boat, it’s not bad, but don’t count on finding a large population of highly-educated people. Tallahassee is a political town.
If you are off the beach, you can find something in your price range. But I would put in the due diligence with respect to the city and neighborhood. No matter where you live here, you had better be heat-tolerant.
If you like the country, try Inverness.
Naples, Florida Sale Prices Turn Negative On Year; Prices Crater 30% QoQ and 6% MoM
http://www.zillow.com/naples-fl/home-values/
‘With real estate prices on the rise, luxurious Bonita Springs living is still within reach at Sorrento, and D.R. Horton’s Southwest Florida Division is pleased to announce an attractive discount on select homes for a limited time.’
‘Imagine hanging a holiday wreath on the front door of a newly-built home. In Atlanta’s resurgent real estate market, buyers ready to move up to something bigger or scale back to something cozier have a wealth of options from which to chose a new address before the year runs out.’
‘During the downturn, inventory homes - also called market or spec homes - were less common because builders found it difficult to secure construction loans on speculative housing. But as the market has improved, more companies find that having a mix of houses in various stages of completion can be a good selling tool.’
‘In some cases, buyers may find incentives to select a spec home. The deals may include perks such as free appliances, upgrades at no additional charge or rebates. Builders with Kerley Family Homes, a company with specs in Gwinnett, Douglas, Henry, Cobb and south Fulton counties, are offering to pay all closing costs for houses closed by the end of the year. In addition, at Springdale Falls in Snellville, buyers can earn a $5,000 bonus for spec homes priced from the mid-$100,000s.’
‘Among the other local builders with inventory ready to go are John Wieland Homes & Neighborhoods, with properties available at Meeting Park in Marietta, River Oaks in Fayette, Legacy in Cobb, Mill Park in Woodstock, Reunion Country Club in Hoschton and the Woodmont Golf and Country Club in Canton. Jim Chapman Communities has three final homes for sale at the adult community Brookhaven at Lanier Ridge in Cumming. Sutters Pond, a Cotton States Properties neighborhood in Kennesaw, has 11 spec homes priced from the $400,000s. Brock Built Homes has a mix of townhouses and Craftsman style cottages ready to close in Manget and Manor Park in Marietta and Oakhurst in Woodstock. Closer in, the company is finishing out specs at Vinings on the Chattahoochee and the Commons, a townhouse community near the Georgia Dome.’
“D.R. Horton’s Southwest Florida Division is pleased to announce an attractive discount on select homes for a limited time.’”
Another canary in the coal mine lies dead on the floor.
‘With the stock market on a tear, with both the Dow Jones industrial average and S&P 500 index trading at record levels, some investors might be looking for a way to get in. The homebuilders might be the best “catch-up” group out there, as residential construction industry stocks have largely lagged the broader stock market, CNBC’s Jim Cramer said Monday.’
“The mortgage applications are good. The re-fis are better, but I think what’s really mattered to this group is people are desperate for something that hasn’t gone up,” he said on ” Squawk on the Street .”
A comment:
‘As a builder, I can’t agree here. At least in my experience here in Ca, the crazies in local government are doing everything they can to artificially raise prices on homes. Soft costs may easily reach $100,000 per unit. All you have to show for it, is a very small stack of papers. It’s getting worse every year. The new home industry cannot prosper under these circumstances. There just aren’t enough suckers to pay $500 a square foot for tract housing. ‘
Soft costs may easily reach $100,000 per unit ??
This is very true in some locals…
Then don’t do business there.
And it’s an article of faith that this puts a floor under house prices, right?
‘Real estate agent Annette Black set a record last year by selling a house in the tony Sierra Oaks neighborhood for $4.75 million. It was the most expensive home ever sold in Sacramento County. The Lyon Real Estate agent is trying to top her record. She listed a 13,000-square-foot home in neighboring Sierra Oaks Vista this week for $6.5 million.’
‘It cost $11 million to build, Black said.’
‘At $6.5 million, “it’s kind of a bargain price,” she said.’
Almost half of what it cost to build. And that’s the asking price, who knows what it could sell for? I’m inclined to think that $100k for ‘a very small stack of papers’ is exactly what it sounds like; a rip off.
Yes HA, good idea. Don’t do business there! Go build houses where people don’t want to live. You level of critical analysis is always funny. HA, Ha, ha…..
Fraud always seems to attract you J._Fraud.
Why is that?
Quote of the day? “When bar tenders and restaurant workers are the biggest growing segment of the economy. Low wage, part-time jobs to not generate enough demand for housing.”
I think y’all get the idea.
They don’t generate demand for anything. Too bad our idiot leaders can’t understand that.
Karen,
city-data.com is a great way to get a feel for a community and learn about the experiences of people who are also looking to relocate. This is a post that is from someone who has made a half a dozen trips to FL in search of their ideal.
http://www.city-data.com/forum/orlando/1308146-retiring-florida-need-good-55-community.html
Good luck with your search
city data is hopelessly over run with lying used house salesmen.
Thanks, Mike.
“Boca Raton Realtor Stephanie Fleishman Back In Jail”
http://bocanewsnow.com/2014/10/29/boca-raton-realtor-stephanie-fleishman-back-in-jail/
“DC Real Estate Agent Charged With Client Thefts”
http://www.washingtontimes.com/news/2014/nov/6/dc-real-estate-agent-charged-with-client-thefts/
Laughed when I saw the Seattle article. This summer our across the street neighbors sold their place. It was a scene out of the top of the bubble. My wife told me that within minutes of a sign popping up on the street, the realtors rolled in. Then literally an hour later the buyers arrived. She said a surgeon in his scrubs was out with his iPhone videotaping the place and chatting (presumably with his wife).
I knew them pretty well, so got the inside scoop. There were 20 or so offers, although it budged only a little above asking. I told the neighbor that I would never buy a house (any more than I would buy a pair of pants) with a bidding war going on. I said, well at least it’s good for you. I kind of sense this is the top. He winced and told me that they had bought a more expensive house. (I had been under the impression that he had been gifted his parents’ house, but I guess they had actually paid full freight.) Oh well.
“He winced and told me that they had bought a more expensive house.”
He has many more wincing episodes ahead, but then again pleasure and pain are dear neighbors.
lots of activity on an open house next to me in 22151
We release the hounds if they look marginal
My favorite quote from the Seattle Times article:
“I feel property values are going to start going up rapidly again,” said Frank, who is renting now. “I’m already virtually priced out. If I have to buy anywhere I’m going to have to get a run-down or a fixer.”
Note that this is a guy who timed the last peak _perfectly_; he bought an overpriced condo in Kent in 2005 for almost 3X what the bank would end up dumping it for.
If he is starting to fear being left behind, then we might well be seeing the last round of suckers getting pulled in…