‘The Market Isn’t Slow. It’s Dead,’ In New York
The Journal News has this update from New York. “It’s over. The crazed phase of frenetic home buying in Westchester, Rockland and Putnam counties has screeched to a halt, leaving some industry experts wondering if the sound they hear now is the housing bubble bursting.”
“‘The market isn’t soft. It isn’t even slow. It’s dead,’ said Liz Rosenblatt, an agent in New Hempstead. Scott Stiefvater, a broker-owner in Pelham, said prospective homeowners are still looking at properties. ‘They just aren’t buying,’ he said. ‘I’m getting a little worried.’”
“It’s gone from multiple offers for more than asking price just hours after properties were listed for sale to no offers at all, even after price reductions. In Wesley Hills, for instance, Rosenblatt recently dropped the price on a four-bedroom, 2.5-bath raised ranch to $495,000 from $545,000. ‘There still aren’t any offers,’ she said.”
“Christine Garafola, an associate broker in Armonk, dropped the price on a four-bedroom in Mahopac from $949,000 to $889,000 in less than three months. The owner still isn’t getting what he’s asking.”
“Stiefvater said potential buyers are looking for value but skeptical of bargains. He cited an impeccably maintained four-bedroom Cape Colonial recently reduced to $659,000 from about $700,000. ‘The current list price is below market value. But now buyers think something is wrong with the house,’ he said.”
“The number of homes on the market in Westchester and Putnam counties has swelled from about 1,000 at the end of the first quarter of 2005 to about 1,500 at the end of the first quarter this year. In Rockland, inventory soared from 734 at the end of the first quarter of 2005 to 1,325 at the end of the first quarter this year.”
“Real estate brokers have concerns because inventory continues to grow, at an average pace of five to 10 listings in most communities each week. Stiefvater said there usually are about 25 homes for sale in Pelham. Now, he added, it has climbed to more than 80. In Clarkstown, Rosenblatt said, there usually are about six residential properties for sale. ‘Right now, we have about 45,’ she said.”
“Data for the second quarter won’t be available until July, but signs of a slowdown already were evident in the first-quarter numbers. Real estate agents and brokers speculate that second-quarter statistics will show an even steeper decline in sales.”
“At least some homeowners are panicking. Worried that increased supply will lead to rapid price deceleration, they are rushing to put their homes up for sale. Some of them think the market will only get worse, real estate agents said.”
“Peter Bell, broker-owner in Mamaroneck, said most sellers are willing to negotiate and are eager for offers. ‘Last year, only about 10 percent of all homes in this area had been on the market for more than three months. Now, at least a third have been on for more than three months. Since more properties are on for a longer periods, you see more price reductions,’ Bell said.”
“He cited an impeccably maintained four-bedroom Cape Colonial recently reduced to $659,000 from about $700,000. ‘The current list price is below market value. But now buyers think something is wrong with the house,’ he said.”
Something IS wrong with the house — it’s too expensive. How can a house be “below market value” if no one is willing to pay it?
To the RE agent: Duh.
Something IS wrong with the house — it’s too expensive. How can a house be “below market value” if no one is willing to pay it?
lol…
Yes, market value is what a person is willing and able to pay for something.
On the other hand, I was thinking about how “cartel’s” or illegal trusts can cause an artificial “market value” to go up or down.
The first example of that, that comes to mind is the Rocefeller trust in which he squeezed out competitors by making thier companies worthless by causing the railroad companies to raise the cost of transporting thier oil, or refusing to transport it, in attempt to bankrupt them and then buy them for pennies on the dollar.
A similar thing could be done with real estate.
“On the other hand, I was thinking about how “cartel’s” or illegal trusts can cause an artificial “market value” to go up or down.”
Cartel-inflated prices tend to be self-extinguishing. Eventually, all the parties to a cartel which successfully drives prices sky high through limiting supply are overwhelmed by the individual incentive to “cheat” by increasing the supply level, in order to capture profits at the inflated price level. This is akin to what is currently underway in the homebuilding industry, as all those builders are trampling one another in their collective rush to convert land inventory into sold houses before the bubble prices are completely deflated.
What the agent also fails to mention is in Pelham, those houses in that price range either border or are near a parkway or I-95. So the locations are TERRIBLE and they still want in the 600 range. Plus, that house he’s raving about is a two family.
Haven’t you heard? Market value is a permanently appreciating price to which all sellers are entitled.
Weren’t they agents saying 6 months ago, “It’s not going to happen here, we are different.” When the sellers smell PANIC, the dot.com crash of 2006 will begin everywhere. I’ll bet on July 4, 2006
Agree entirely. I think it’s BS to call this an emerging buyer’s market. It is just more propaganda when realtors bemoan a “dead” market. 10% off an already grotesquely inflated asking price is not a “deal,” nor does it indicate that buyers are truly driving the market. I’m ambivalent about a housing crash: as much as I’d like to buy a house in LA for 50% off, a sudden plunge in property values will hurt everyone. But I’m not ambivalent about the dangers of buying in today’s market, even if you get 10%-20% off asking prices. Unless you have a crystal ball that guarantees you’re going to live in that house until they take you out in a casket, it still a far better deal to rent (at least in LA, CA). I think we’re looking at a late summer dead cat bounce in LA as the NAR rhetoric convinces more people that NOW is the time to buy.
“emerging buyer’s market”
I think it is appropriate to call this a submerging seller’s market.
I think some of our enterprising readers should go around offering $0.25 on the dollar. Why not? $1 million dollar asking price, offer $250,000. What’s the worst thing they can do? Agents that refuse to present those offers are in breach of their fiduciary duties.
As we read more and more stories about houses with zero offers, some people are eventually going to at least consider the lowball offer, or a counter.
How about walking into a realtor’s office with a 100 ounce bar of gold and offering 25 cents on the dollar? Gold in hand frequently garners a lot of attention.
““‘The market isn’t soft. It isn’t even slow. It’s dead,’ said Liz Rosenblatt, an agent in New Hempstead. Scott Stiefvater, a broker-owner in Pelham, said prospective homeowners are still looking at properties. ‘They just aren’t buying,’ he said. ‘I’m getting a little worried.’”
LOWER THE PRICE! It does not take an economic genius to figure this out.
David
http://bubblemeter.blogspot.com
“LOWER THE PRICE!”
How can they lower the price? Some owners are upside-down already. Two guys in office are upside-down now, far more in a year from now.
Well, shit happens. Sometimes you LOSE money. So, if they “have” to sell, it’s payback time. This stuff just irritates the hell out of me.
I’ve been wondering how this sort of thing will affect buying a house, given the fact that in the next couple of years it will probably be the norm rather than the exception. If a seller is upside down and forced to sell, and I make an offer on his house that requires him to come up with, say, $50K he doesn’t have, what happens next? I assume the lender(s) have to approve the sale, but to what extent does this complicate the transaction? Do I have to wait months for “approval,” or does that happen before the house is listed at the upside down price? Just curious.
Great question. I’m hoping that short sales are ‘resolved’ quickly, so that the market can begin moving. Some possible ideas about helping short sellers:
1. Lenders will begin accepting short sales more often, because if they foreclose in a declining market, they can’t recover the loan. In other words, the lenders have already lost, because the value of the collateral (the house) has fallen. The quicker lenders write off these bad loans, the better.
2. Maybe we’ll see creative loans given to short sellers (the seller takes out a loan to “bring money to the table”). It’s always tough to extend a $100K unsecured loan to a seller so that they can “bring money to the table,” but what if these new ’short sale’ loans get special protection (immune from bankruptcy, like student loans). Then sellers could then finally sell even if they are upside down.
“LOWER THE PRICE”
Yes! They have no choice, we’ve run out of GF’s who can (or will) buy at today’s prices. If people are upside down, they have to bring a check to the closing. That isn’t, historically, that uncommon an event. Ok, not common either.
Or is it better that they hold off until prices continue to drop.
BTW, I love how “market price” doesn’t include foreclosures…
Neil
“LOWER THE PRICE”
Yes, it all seems so clear to us but if a fb can’t lower the price without suffering a financial catastrophe then they will hold out hoping for a miracle rebound. I’m not saying it’s smart, but it is human nature. The condemned are forcibly “escorted” to the hangman’s noose as very few walk willingly to their fate.
The same high personal discount rate which led many fools into buying homes they ultimately could not afford to purchase will lead them to forestall facing the inevitable financial loss, thereby making said loss ultimately much larger than if they took their medicine forthright.
This shows how influential speculator driven pricing was to raising the price of houses in and around NYC. Once it is apparent prices are not going to rise and create apparent wealth in the properties; buyers are not willing to pay overvalued prices. When valued added appreciation equity is removed home prices revert back to their functional values as shelter. Likewise the prices people are willing to pay are more in line with the use value of the assest. Gordo
Gordo,
One of the fellows on patrick’s has said this for some time. His basic premise was that all we ever needed for the crash to start was for price “appreciation” to stop! Once the easy money is taken out of the picture it’s funny how quickly sobriety sets in. Oh and I HAVE to agree with the other posters as well. How can this home be “below” market value when NO ONE is willing to pay it?
Then the blame game will start and the lawsuits will fly. Nothing like a spoiled bagholder who now is facing actually having to pay for his stupidity. Oh, the humanity.
Also, there is a flip side…A property that never should have had a value above between 500k and 550k that increased to 850k will not only come back to its real value of 550k, but before this occurs it will swing down to 400k and take maybe a year and a half to get back up to 550k and then stay at this price for 5-8 years…
To homedebtor sellers and their RE agents: IF IT ISN”T SELLING, TRY A LARGE DROP, LIKE $100K and SEE WHERE THE MARKET VALUE IS!!!!
If you truly list below market value, the price will get bid up to market value. List it on eBay real estate and see what happens.
Comments like that from realtor’s astound me. What they don’t offer is the square footage of that 4 bed cape/colonial. It’s probably around 2,000 sq feet (including basement) and they are expecting people to pay $659K for it. Get real. That means, according to their logic, that that house will be worth over 1 million dollars in 5 years. It’s probably on a postage stamp size lot as well. Here, in Newburgh, there is a listing for a 3 bed, 2 bath, 2,100 sq foot ranch home (1,000 of that sq. footage is actually the garage which is under the house and therefore not living space), on 1 acre, built in 1964 w/no updates. It’s listed for a whopping $575,000.00. Our “realtor” called the listing agent who said, “make an offer, sure, as long as it’s over 500K.” It’s insanity, pure insanity.
$575K in Newburgh ? Cripes, some parts of Newburgh remind me of escape from Detroit, plain scary !
Actually, the movie was “Escape From New York”
http://www.imdb.com/title/tt0082340/
Sorry, I lived in Detroit. I was glad to escape…….
I’m hoping this article in the local paper starts to scare the sense into the sellers here. The Journal News after having been a dimwitted cheerleader during the boom, has kept silent on the housing issue for months. “Price reductions” on the properties I’ve been tracking have been laughable so far.
I stumbled on the “Rand Report” put out by local realtor Prudential Rand a few weeks back. It actually showed charts/graphs that depicted decreases in total closed sales, av. selling prices, avg. days on market and the listing discounts. I was amazed. In Orange Co, where Newburgh is, it showed a 26.6% drop in closed sales as of 1st quarter ‘06, and a 3.2% avg. in price drops. I love watching the prices come down, but at 3% a clip it’s a joke. We signed our lease for another year as I don’t expect reality to hit until next spring when rates are 7.5% and then we’ll see some reasonable price drops.
They are still building like crazy also, Beazer has just started a huge McMansion paradise on Sarah Wells Trail in Washingtonville, affordably priced in the 600-700s, along with 2 other companies with 2 other communities. They just opened the one in Walden and it was already part of their 24 hour firesale, still the same houses for sale though.
“At least some homeowners are panicking. Worried that increased supply will lead to rapid price deceleration, they are rushing to put their homes up for sale. Some of them think the market will only get worse, real estate agents said.”
Perhaps they’re thinking that it’ll get worse because it’s going to get much worse?
“deceleration”? what a horsesh*t RE view on what’s happening! they’re going to WISH prices only decelerate.
When you smash into a wall at 50mph, that’s also called “decelleration”
I would be very interested to know how real estate sales on eBay are going now that everything seems to have died in the real estate market.
Are real estate items finding no bidders. Are real estate items mysteriously dispappearing from auction. Are sellers putting high minimum starting bids on real estate up for auction? Are there more or less real estate items this summer over last summer? If more or less, what are the numbers? etc.
This is kind of hard to call. To me it seems like about the same number of auctions, but more than usual getting no bids. There is still craziness going on, though. For example, lots in Elko going for more than typical trading value. There is market value and there is market value and there is something happened with that auction on eBay who can say what market value. Elko Fever freaks me out at least as much as West Nile and Bird Flu.
LI market is dead, too. It’ll be interesting to see what happens now that summer has arrived. Also, this should be interesting:
“New tomorrow in Newsday”
June 22, 2006
“Starting tomorrow, the pullout Real Estate section inside Part 2 will debut with not only a fresh look, but also brand new content.
Each week in “Why You Should Buy My House,” homeowners will make a pitch - in their own words - on what makes their house so special. “…
http://tinyurl.com/mstp9
“Why you should buy my overpriced POS”- can’t wait to read some of those. “My house is one of a kind, perfect location, excellent schools, I would never even dream of selling it if it weren’t ‘worth’ double what I paid just three years ago.”
I think I puked in my mouth a little after reading that. The Pepto Bismol guys should thank you for added sales.
Long Island will be pure carnage next year, the young college grads have been hightailing it out of there for years because of the high taxes, costs….The’re hoping new immigrants moving from the city will spur demand, wait till they find out your average city immigrant considers a three bedroom house with a backyard fit for a family of 14.
I love how re agents use immigrants as individuals who are going to keep re prices up “population growth” Immigrants don’t have 50k for a down payment or anyway of getting it…if they did, they wouldn’t have leaft their own country in the first place,
other note, the cost of living in the u.s. is too high for the life you receive here, not making a knock, but is committing to a 30 year loan on a shack for 700k when you could lose 200k in 2 years while working your a off worth it anywhere on the planet?
Each week in “Why You Should Buy My House,” homeowners will make a pitch - in their own words - on what makes their house so special.
This is not nearly enough. I refuse to buy someone’s grossly overpriced house unless they also agree to:
–keep feeding the squirrels for me in perpetuity
–submit a 10,000 word essay on why they think I should choose them over all the hundreds of other f@cked borrowers
–submit a recent 8 X 10 color family portrait (preferably with a nice frame)
–oh, and price it within +/-5% of what it would rent for X 100.
It’s probably me getting up on the wrong side of the bed or something but this article just kills me.
“Christine Garafola, an associate broker in Armonk, dropped the price on a four-bedroom in Mahopac from $949,000 to $889,000 in less than three months. The owner still isn’t getting what he’s asking.”
I mean, who the fu*k cares about what he is asking? How about what I’m asking for, like a friggin bolt of lightning hit this moron and his broker sittin at the kitchen table while they are sittin around pullin each others pud wondering about why money is not being thrown at them with this ridiculous asking price!
For the last 5 years these frickin Realtors were going around jerking everyone off, getting everyone in the mood for a real good time and now that everyone is all worked up, ready for the big “close”, these same assholes don’t have the balls to break the news that the “big close” actually entails some bankers big bone being shoved up their backside for the next 30 years!
Get a g*ddamn clue sellers! This market is going to CRASH! If you don’t want to spend the next 30 years getting porked by your stupidity then call your RE agent/fluffer and demand they list your house 10% below the last sale and lower said price every week until it sells, period. Scrape together whatever assets you can come up with for the close and take out whatever personal loan you need too inorder to get the sale done and over with. Comfort yourself with the knowledge that you will ultimately come out way ahead with regard to the ass-pounding those reluctant sellers who hold out are going to get!
Then take out a pad and pen and write “trees don’t grow to the sky and everyone doesn’t get to be a millionaire” a 100,000 times or until you frickin understand life, whichever happens first!
Jeez, I’m in a surly mood today, rant over.
Auger - Have you ever considered switching to decaf?
It’s not just you, the sense of entitlement is disgusting.
Everybody gets those surly moods and it is therapeutic to read others rants.
I say let ‘em live with the deals they struck.
No bailout by even greater fools.
Auger — You’ve got to stop spiking the coffee pot
Yeah, that’s probably it. Woke up with a case of the ass today, should probably quit while I’m just behind. I’m switching to decaf as well.
Ok. This is the best real-estate rant I’ve read in a very long time. I’m still giggling. Great job!
Auger…mellow out! Maybe don’t. I love it!
Rant on.
NY prices are easily 50%-60% overpriced. They have doubled and tripled since 2000. Why do these sellers think that dropping the price by 5%-8% will make a difference?
“At least some homeowners are panicking. Worried that increased supply will lead to rapid price deceleration, they are rushing to put their homes up for sale. Some of them think the market will only get worse, real estate agents said.”
But, but, but how can that be. It’s their dream house, they could afford it, and property only goes up, up and away. So why would you panic unless you were overextended?
Exactly. They “own” their homes, they won’t sell unless the price is right… remember, real estate is “sticky.” They’re not making any more land you know… Prices are flat or going up in most locations…
and yet…
inventory is at or near records…
sales are slowing…
I love the articles that act like the seller sets the market price… I will once again post that homes are sold in a auction like environment. Normally, its slow enough to find buyers near the asking price (IIRC, this area home used to sell for 4% to 7% below asking price pre bubble). Normally, sellers offer homes for something close to a rational amount.
Grab your popcorn. Look at OCrenter’s blog on inventory… Pheonix is *almost* at 50k. San Diego is at record inventory…
http://bubbletracking.blogspot.com/
Oh, my “buyers blog” is sitting idle. I don’t expect to activate it for 18+ months.
Neil
“they aren’t making anymore land” They are however making 150 unit highrises that are 80% owned by flippers and empty. These rises only take up as much space as three housing units. But “they aren’t making anymore sky”
Where are all the super wealthy immigrants to snap up the RE?
Yes there are superrich immigrants, but like the superrich natives, they can’t prop up the housing market (and like superrich natives, they’re smart enough to exit the market when it’s risky). Any immigrants buying now are moderate/low income marks being fast-talked into bad mortgages–often by con artists from their own communities. I see it all over Brooklyn and it’s on Long Island too.
The targeting of the immigrant community right now borders on criminal, IMO.
This from a Seattle grocery store RE booklet, advertising homes for sale in a traditionally imimgrant neighborhood (Beacon Hill):
Lowest rates in town. 0% Down. I specialize in:
-First time homebuyers
-No money down
-Bankruptcy
-Bad or no credit
-No tax return
-No income stated
-No employment stated
-Educating borrowers (!this one kills me- how sick can you get?)
Call: Ravi Ahluwalia
I have some contact with different immigrant communities here and am doing my best to spread the word that now is NOT the time to buy.
I encourage anyone whose in the same position to do so also.
It’s really easy, when you do not speak the language, to be completely out of the loop as to what is actually going on in the country you’re living in.
Anyone who can should get on board to spread the word in these communities. These are really hard working people who, if they don’t get sidetracked by some idiot lender/RE Agent anxious to make one last buck before the party’s over will do just fine.
The alternative is bankruptcy before they’re even fluent in the new language.
That ad you just posted is not only in immigrant communities. I’d bet large money you can find that ad in any community. Why?? Because every community has their share of idiots who know nothing about finance but feel because they breathe they should own a house.
What about all these media articles that reported markets that were underpriced for the last 3 years and now they are overpriced thanks to the flippers/stupid buyers . I was reading a article yesterday that stated in essense that Hollywood Ca. was under priced .You watch , people will use that article to justify higher prices . Not long after they had a article in the business/money news about how under priced Boise Idaho was the prices started to soar .How long will it be before Idaho has a inventory glut ?
Did someone say Idaho real estate inventory glut?
Are you trying compare an area that includes Sun Valley and Ketchum to all of the reset of Idaho?
Or, for that matter, specifically to Boise and its environs?
WTF?? That article is from November 2003!
In all of this, what percent of sellers cannot lower their price to the market? Adding up the IO/ARM/Neg AM no-equity bunch with the HELOC’d to the last dollar of equity bunch - and where are we? As rates slowly creep up, I’m reminded of boiling frogs.
You only need 5% of the sellers to lower their price to market. Once those places sell, they become the new comps.
This is how it was working before:
Say you live in a neighborhood of 100 houses:
One house sells for $50,000 more than the last comp.
Suddently, all the other 99 houses are worth 50K more.
This means $4,950,000 in “instant equity” was suddenly created for those other 99 homeowners because one sucker overpaid by $50,000.
A few months later, the next sale is 50K more than the last one…
So another $4,950,000 of equity was suddently created.
Now, we are just starting to see it happen in reverse.
this is called funny money..asset prices go up/down just like that. Poof.
But once you leverage that rise, it is a cascade.
Now developed countries total housing market is now~70 trillion, and had risen (funnily enough, from 20 odd mil in 2001)
That funny money when evaporates, what happens?
Simple - it’s called a deflationary depression. See: United States, 1929-1933. This one will be worse.
This means $4,950,000 in “instant equity”
was suddenly created…
And probably more if you factor in crooked appraisals…
Truth be told, frogs are smart enough to jump out of the boiling water if they aren’t completely trapped.
Yep, boiled frog is an urban legend.
People aren’t that smart.
Anyone here know about Rochester, NY? Looking to move there for long haul.
I went to the Realty Times Web site and found Rochester, NY. Two realtor’s there call it a “buyers market” with avg. housing prices at around 100K.
http://realtytimes.com/rtmcrcond/New_York~Rochester~earlkrakower
I think it’s a nice place to live/raise a family - taxes are high but housing is pretty affordable. obviously it’s cold/snowy in winter. good school district is brighton I believe.
My folks live there. Rochester proper is a pit, but there are lots of nice suburbs surrounding it. Its fine right now if you are in the medical profession, or if you work for Xerox. Down town is pretty nice with a new mixed use stadium and other ammenities. But it is typically Upstate New York with a decaying 1st ring suburbs and a population of hard-core welfare recipients that depended of a manufacturing base that is long gone. Although it remains a nice place ot live if you have employment or are moderately wealthy and retired, I have concerns about the area long term.
If the major industry of your area is healthcare, I cannot see the economy being strong long term. If those jobs go, and nothing replaces them, the social situation could worsen significantly, making the downtown dangerous. Finally, taxes are already high in the area, and the burden could increase on those with income if the economy falters. Just my .02, my folks love it there.
Anachronist has given a perfect description of all of Upstate NY cities. Add in the descriiption of beautiful countryside of the poster below him and you’ve got the complete picture, good and bad.
The people are very warm and there’s a better sense of community than many places in the US. That’s all I’d add. Maybe that’s why Anachronists parents like it there so much? It can’t be the weather!
Kodak is doomed - I have talked to their technical consultants, IT engineers, and accountants. They invented the digital camera 20 years ago and then decided that they are really in the film business. Polaroid, anyone?
And the management at Baush & Lomb has been so deft lately, No?
I fear Rochester is the next Flint.
Well, as a worker in the photography studio, I have to say that their photo paper business is doing well. They are the sole source of “platinum” or “metallic” paper, which is very popular for high school dances and a large portion of the studio market.
But that’s today. And their Endura paper is nice, but Fuji is quite competetive on price and value with that.
“A” photography studio. Not “the.”
Rochester itself is just another old city but below Rochester by about 50 miles is the finger lakes region which is a beautiful place to live and cheap except for houses which are on any of the lakes.
CANANDAIGUA! “The Chosen Spot” Go Braves!
I went to college in Rochester. The city itself has some pretty crappy areas but all in all I think it’s a nice place to live and raise a family. For my field (optics) the city is actually a world capital. It’s got some good universities in the area.
This reminds me of a common argument I have with a friend. He believes that only those people that have to sell will sell, and the rest will eventually pull their homes off the market if they can’t get what they feel they deserve. OTOH, I believe that at some point the fear of losing all of their equity will kick in and they’ll take what they can get just to stay above water. So many people are depending upon their home as their retirement savings these days.
Right , people who were going to sell in the next 2 to 5 years might put the houses up now with the market changing . It will only add to the inventory glut ,( seems to be happening already ).
I was talking to a relative whose house is up about 50% from a few years ago. Long-time resident, no mortgage. They don’t think of the increase as real or permanent. They will simply sell when it is time to eventually move for normal life reasons, whether they keep that 50% extra or not. They will not wait to earn back the 50% that they never considered real.
That extra equity doesn’t matter to some old-school long-time owners (ie, people who actually OWN their homes). If they need to move and the bubble has popped, it will not really affect their situation or their plans.
I’d imagine that despite the credit madness of the past few years, there are still large numbers of practical older folks who are not caught up in the madness of imaginary money.
This is actually the study I’d like to see - just how many practical older folks (who don’t need to tap housing equity for retirement) are there? Retirment studies vary, but usually the range of retirement savings for the average American is around $30,000-$50,000. So my guess is, idiots outweigh practical older folks by at least 2:1
walt -
Disclaimer: I’m far from an expert, and I’ve never been to Rochester, NY. I read that there are a ton of places for sale, nice and cheap. Rochester went downhill after Eastman Kodak closed. Something like that.
A while ago, I saw a gorgeous one, huge old historic-type home on big lot, needed some work. And about 1/15 the price of a California suburban crackerbox. I’m not looking to move there, but every once in a while I pick a city and look at the homes for sale at realtor.com. Someplace has listings of houses seized for unpaid taxes there, too, so you might be able to find a real bargain.
I moved out from NYC to Hoboken last year, bought a preconstruction 2br in Jan 05 and sold it prior to moving in in Jan 06 when I rrealized my 3br’s rent was $1000 less than the mortgage and taxes. I feel bad for the bagholder who bought it from me at the top because the prices in the building have already dropped 15%. I was able to do an FSBO on craigslist and get to contract within 3 weeks because of the demand at the time.
Now I hear that things have died and property in Hoboken is not even getting a sniff so I am one of the lucky ones that made some cash and can sit on the sidelines while the blood runs on 05 and 06 buyers who are going to have to assume hands on ankles.
At least you realized it wasn’t affordable for you . Hopefully the person that bought the place from you is a long term end user .
You do look like a flipper . Curious why you bought the place and than realized after the fact that renting was cheaper .Did you not know what all the costs were when you purchased ? What were you thinking ,(if you feel like talking about it )?
We had 1 bedroom in Jersey City downtown listed for $320,000
half a year ago, reduced to 309,000, then to 299,000, then withdrawn, now it is rented out.(Didn’t really have to sell, were just testing the market, were ready for 1031 exchange for out of state property, if were given an offer).
Exactly the same 1 bedroom in our building was listed $329,000 at about the same time , then, reduced to 305,000, then to 289,000, and still sitting.
The Journal News has this update from New York. “It’s over. The crazed phase of frenetic home buying in Westchester, Rockland and Putnam counties has screeched to a halt, leaving some industry experts wondering if the sound they hear now is the housing bubble bursting.”
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“Fools” said I, “You do not know
Silence like a cancer grows.
Hear my words that I might teach you,
Take my arms that I might reach you.”
But my words like silent raindrops fell,
And echoed
In the wells of silence
I know what mood your in today Getstucco
“It’s gone from multiple offers for more than asking price just hours after properties were listed for sale to no offers at all, even after price reductions.”
This shows how just how fast the latent market price dropped after the last parabolic runup in bubble prices. It basically went into a free fall, but nobody trying to sell at the recent comp price could see this — all they saw was that homes priced at levels where they would have sold last week with multiple offers suddenly would not sell even with price reductions this week.
I live in New York (a renter) and just received something in the mail from one of the realty companies. They had this nice chart that tried to make the point that even if we a a “serious” correction that it still made sense to buy now. What they did was persume an 8% interest rate with about a 15% price decrease (not exact but you get the picture) and then calculated that, with that reduction in price your monthly payment on a $1 million hole would be $7,000 instead of $5,000. Wow! I guess it never occured to them that what that really means is that if mortgage rates go up to 8% they would have to reduce the price EVEN MORE than 15% so that the people who could afford a $5,000 a month payment would still buy it. I always thought that the justification for the higher prices was that people could afford more because of the debt service? But somehow that is not supposed to work in reverse? That is a compeltely fine analysis if one plans on living in your house forever but does not really work when you consider that people may eventually need to sell. I have been waiting for this market to turn for over 4 years now. But somehow it just keeps getting propped up. Even though housing price increases were never really cause for alarm at the fed (because they were excluded from inflation calculations) when the market slows and that begins to hurt consumers suddenly it will become a good reason to cut rates to goose the economy again (a “son of bubble”?)
See my post on the Bits Bucket for a quantitative example of your point.
Don’t forget that the monthly payment will likely fall as well as the sales price. People have allocated a greater portion of their income toward housing expenses because they were “earning” more than the cost increase via appreciation & cash-outs. This is really where the speculative premium lies, IMHO. The monthly payments will get slashed as housing prices drop and buyers consider the risk of falling asset prices. “Howmuchamonth” are you willing to pay for a depreciating asset when you can get a comparable home (rental) for about half the cost? Add to this the rising interest rates and it will become obvious that prices will fall rather significantly over a long period of time, IMHO.
To Housing Wizard-
Not everyone who flips is a flipper if that makes sense. I do have a ton of RE experience but my wife and I just decided we liked our current situation and to put a brick of cash in the bank and still rent a place we loved was too tempting. I could have afforded the other place but the risk/reward for holding on to a smaller apt that was much more expensive on a monthly basis just so I can be a home owner seemed silly. So I sold, took my cash and am now waiting to dip in after a collapse. I love the place I sold but the Quality of Life issues get out of whack when ownership is so expensive.