What’s Going On In Your ‘Parade Of Homes?’
What do you see in your housing market this weekend? How about homebuilder incentives, “Shopping for a new home? There’s never been a better time to buy a new, ready-to-move-in home than now. June 23rd-25th is your chance to get the beautiful, brand new home you’ve always dreamed of, at the lowest interest rate we’ve ever offered.”
Did you know, ‘Great friends Make Great Neighbors?’
“As home builders nationwide hustle to sell houses in the slowing real estate market, one Central Florida-based company is trying something different: To sell 96 homes within 96 hours. The Mercedes Homes sales event kicks off today with reduced prices on existing inventory in select markets in Florida, Texas, North Carolina and South Carolina.”
The Palm Beach Post, “As the local real estate market enters what the Florida Association of Realtors calls a ‘correction,’ folks have been forced to come up with creative ways to sell homes. So how do you get buyers to look at your property when the list of homes for sale grows longer every day? ‘We’re having artists display their works in our open houses,’ said Realtor Stefanni Gius.”
“‘We’ve also banded together with other Realtors, and the entire community has a Parade of Homes; showings of all the homes for sale,’ Gius said. ‘We all support each other’s open houses.’”
Here’s one from a reader. “Just got back from the Jersey shore (Long Beach Island). I’ve been vacationing there all my life. I have NEVER seen so many For Sale and For Rent signs as I did this past week.”
“The For Sale signs I get, but why so many For Rent? Down there for rent means seasonal rental (i.e. by the week, month, or summer). So my question is this; does anyone else see signs of people cutting back on vacations this summer? And why is this? High gas prices? Can’t afford it with all the high mortgages, car payments at home? It was curious, for sure.”
Another reader sees a sign on the internet. “I’d like to see some statistics showing some sort of correlation between sales slowdown month-to-month and the number of ALL CAPS POSTINGS ON CRAIGSLIST.”
http://www.kernradio.com/
____________________
Weekly update on our market!
I am the next caller. If anyone cares to hear me. Hopefully I wont blow up.
Listening… they sound kind of bearish!
I was far too kind. UGH
They were very bearish, espcecially at the beginning - discussing short sales, foreclosures, etc… That is why I called. Normally they are Perma-Bulls.
Interest rates starting below 5%, $2500 in free upgrades. I know, pretty lame.
I have a lot of pent up posting from being on vacation - I apologize if anyone’s getting sick of seeing eastcoaster…
Ben, I watched Enron: The Smartest Guys in the Room last night and now I have documentaries on the brain (I love them). Have you considered working on a documentary about the bubble? Your name’s pretty well known out there now and I’d bet a film by you would be very well received if and when this mess really unravels (like to the point where no one can deny any longer what has happened).
Excellent idea. Just dont have Michael Moore do it. LOL. (not a political comment either way - just trying to be funny)
Titles:
David Lereah - The biggest Liar in the country
Alan Greenspan - The biggest bubble blower in history
Greenspan - pay no attention to the man behind the curtain.
A must see documentary is “The Corporation”. You can get it on Amazon.
I’ve seen it, but somehow I didn’t think it was ‘must see.’ It seemed like 90% BS, with perhaps 10% being something to be concerned about.
I’d suggest renting it instead.
If you are a fan of “free market capitalism” and “globalization” you won’t like it. If you are someone who wonders whatever happened to the common good and how all decisions boil down to a buck….it explains a lot.
Sounds like most people tend to see The Corporation through their own ideological looking glass, which misses the point. Directly relevant to the bubble, home builders who should have had the experience and wisdom to avoid hitting the wall have been playing chicken with fate. It is possible that the way corporations are structured to be directed toward short term goals actually hinders long term viability. How best to structure corporate endeavors is actually something that fans of capitalism, markets, and globalization tend toward, but unfortunately many in business have an unhealthy attitude toward inquiry in general. That also has some direct relation to the bubble as the clues were there for all to see, yet it is only recently that the bubble started to be taken seriously. Inquiry is healthy and the search for optimal corporate structures will never stop.
Mole -
I particularly like what you say here:
“It is possible that the way corporations are structured to be directed toward short term goals actually hinders long term viability.”
Regarding what you call their structure, I wouldn’t say “it is possible”, but for some corporations, “it is likely” - if not “very likely.”
Hire Morgan Spurlock to do it! “Supersize My Mortgage”.
Have him flip three supersized houses everyday for 30 days. I think that stress will destroy his body/health even faster than a steady diet of Big Mac, fries and gallons of coke.
contact michael moore
I emailed the person who produced the documentary “American Jobs” and suggested he look at the Real Estate bubble. He said he was aware of it, and it seemed interesting. This was a good 5+ months ago that I emailed him.
Other documentaries outside of the Corporation? Outfoxed is one, and End of Suburbia is another.
This is a few days old, so maybe this was posted already. Read the realtor comments towards the end of the article…too funny.
Buyers, sellers in pricing deadlock
http://tinyurl.com/h3rp9
With unemployment remaining low, homeowners can and are holding out for their price, although multiple offers and quick sales have vanished
Other agents complained that some buyers are waiting for prices to come down.
“I’m having a lot of problems with my buyers,” Heena Shah, an agent with Prudential California Realty, told agents gathered last Wednesday for the weekly Irvine-Tustin broker preview of homes. “They’re picky. They don’t know what they’re doing (and) they’re waiting.”
Sellers, on the other hand, “are pretty much adamant about their prices,” added Jacqui Graves, an independent agent who’s watched real estate cycles for 46 years.
So sellers don’t know what they’re doing? I’d say they’ve finally wised up, most likely through fear not brains. As least we know the ‘problem’ is with the buyers.
I know. I can’t believe those realtors were actually quoted saying that. Well, I guess I shouldn’t be surprised..
“On Tuesday, there were 6,712 Orange County homes for sale at or below May’s median price and 9,687 homes listed above that, Southern California Multiple Listing Service figures show.
If there are fewer houses available at the lower prices, then it’s less likely there will be more sales that would pull the median down, Chapman said.”
An idiotic statement. A disproportionate percentage of homes priced above the median NECESSARILY means that the those priced below have pulled the median down. I’ll bet every housing bull got fooled by the “logic” of that statement.
In several places in northern Arizona this weekend there will be auctions; first time I’ve seen that. I believe it is a function of the wild variations in asking prices. Two homes are $1 million and up. Another is a house in Cottonwood with a minimum bid of $224k. Lot asking prices are also swinging by big amounts. Some people seem to be expecting a premium on the 2005 run-up, while others are clearly in distress, ‘bring offers,’ ‘must sell,’ etc.
Ben are these sealed-bids or the classic, public “do I hear 300?” auction. The latter is commonly used in PA at least as part of settling an estate after the owner’s death but not for otherwise normal transactions.
The house across two doors down just got put on the market for $970K.
This is a 3/2 in nice condition in North Park (San Diego). We went in the open house today. This is a fantasy price only. I don’t know what they will get for it, but it won’t be above $850K and even then I’d be surprised. There is a house down the street (smaller) listed at $689K. Zillow puts it at $713K.
I am seeing a lot of these “fantasy price” listings in all of the bubble markets. I believe a lot of these sellers are just hoping for a windfall and if it doesn’t present itself, then they will stay put. My neighbor is one of them. A year or so ago he put a stupid price on his house (needless to say it never sold) and told me he was “testing the market”. Well, I would have preferred he use the term “showing my greediness”, or “dreaming of eutopia”, but anyway, it remains to be seen how big a part these worthless listings play in the swelling inventories. I hope, not too much, because if they are a large percentage, then the bubble is not as big as I had hoped and the price correction will not be nearly as drastic.
Maybe the “townies” in each area should show up every Sunday at the open houses?
All the San Diego people showing up here and talking about comps and Zillow pricing, etc. might have brought the price down a lot faster.
Please tell them I will buy this house for $350,000 and will even feed the squirrels.
One listing in the Long Beach Island real estate section this week had a 2BR, 1BA condo - 440 sq. ft. for $450,000. Insane price aside, I had to re-read that a few times. 440 sq. ft. with 2BRs? How is this possible? I’m thinking it had to be a misprint. 440 sq. ft. is barely a studio. Can’t find that listing online, but how about this one? http://tinyurl.com/h7v5l It’s a freakin’ motel room for crying out loud!
That’s worst than the 900 sq ft shacks that go for $200K in S.Florida - in bad ghettohoods!
you are right. in 2002 they were 125,000 and people had their homes broken into and had to put bars on their windows. that was too much then! most of them have roof damage now and are not worth 50,000 (in south florida) with no redevelopment, stores or transporation, it is beyond a blood bath.
Believe it or not, this is possible and even shows up some places:
Kitchen 8×8=64, Bath 5×7=35, Beds 7×7=49 + Closet 3×4=12, Living 12×18=216
Two bed apartment comes to 437 with this layout, though the living room will probably not be square. Even in Japan and Singapore this would be considered a small living space, though not substandard or even that unusual.
Long time listner, first time caller …. Cape Cod.
This blog is like crack … great content, educational and very entertaining, I’m addicted.
I recently put some money into a CD (sold in the fall of ‘05) and I can’t believe
the flyer that came with my little ‘welcome to the bank’ folder.
It had some quotes from DL and basically said … Hey folks, don’t worry about selling
your current house if you’re looking to buy, there are some great bridge loans
available today. Just buy that second house, don’t worry, we’ll take care of you.
Some quotes from the brochure …
‘Bridge Financing Yields Negotiating Power’
Home-To-Home Loan ideal for spring selling season
In most parts of the country , more than flowers bloom in the spring.
Spring also heralds the prime real estate season.
This spring home buying season promises to be solid around most of the country.
According to David Lereah, …. the real estate market should prove strong overall.
When home sales ara a little lower than projected, people sometimes lose sight of
the cyclical nature of real estate, according to Lereah.
.
.
.
Now that buyers have more choices, it’s even more important for sellers to seek
advice from real estate professionals,” noted NAR president Thomas M. Stevens.
(good advice, like buying a home you can’t afford without selling your current in a terrible
market with rising inventory ????)
.
.
.
The problem? In the past, bridge loans came with some hefty risks, including high interest rates,
stringent qualifications and the burden of additional costs as closing and mortgage insurance.
.
.
.
It went on to say that older bridge loans were typically for 6 months and adjustable, they now have them for 2 years fixed.
Of course it mentioned, you can take cash out of the old home for down payment, blah, blah blah.
These people deserve to be sued at some point. I do believe it will get ugly and
feel bad for those who have been priced out, for years, especially California … wow! those prices are high.
Like the Chilli Peppers say …. ‘Cal-i-fornia rest in peace’.
….
Those brochure quotes are aweful. I can’t beleive banks want to dig themselves into a bigger hole.
OT, had to fly this weekend for business. Anyone notice the land for sale advertisements in airline magazines?!
GOOD DEALS on Wyoming ranchlets. Own 40 acres for less then $5000 an acre.
whoever buys these properties should have their brains checked.
Wow , I’m grossed out . Now you know how the NAR and the real estate crowd are getting to people . This is the most discusting thing that I have heard so far .
I’ve been told that a local hotshot realtor has gone belly up. Classic poser story. (Knew someone who once temped in the same office. His personal secretaries wouldn’t even talk with the other secs.)
Closed his shop without notice and now the bank has his properties. Must of just been pulling cash out all along as if it would never end.
What city is this?
East coast vacation town. OCNJ. Some real slime ball realtors here. Problem here is that some fool can always be found to buy a neg cash flow beach property which really warps their egos as they confuse luck with skill absent any sort of negative feedback.
waahoo - do you live in Ocean City? Or nearby? (I enjoy seeing people from my semi-neck-of-the-woods on this blog.)
Yeah. Where are you at?
Just outside of northeast Philly
Did we hit 50,000 yet in Phoenix? I’ve noticed people moving at 3 houses within view of my house in the last week. Most of these houses have been sitting for 5-6 months and must have sold in May. Summer rally? After the county recorder gets the records in the database, I’ll try to get the scoop on selling prices. I only know the listing price of one of them, though.
Phoenix hit 50k sometime about 4 or 5 days ago. What you’re seeing is the typical “dead cat bounce” as soon as people see that the sellers cut their price the slightest little bit. The rest of us are holding back and letting them fall. I’ll help them pick up the rubble that’s left.
Just did a quick check of Irvine, CA inventory…haven’t checked in a while and jesus I couldn’t believe we are over 1,100 listings (SFR and condos.)
This number was around 500-600 for a long time…
The market I live in looks like its starting to come down 10% in asking price but it looks like the houses are still sitting . June is usually a hot sales month for real estate . Curious to see what happens in a month . One lady told me she had a lot of people wanting to buy her listing , ( that was at a lower price ) ,but the buyers can’t sell their house .
“Present your offers….and allow us to present ours.” — Beazer Homes
I thought they don’t negotiate with terrorists… I mean buyers!
OT: I put this in the ‘Bits’ section, too.
Japanese RE ad…. funny if you are a golfer.
http://www.metacafe.com/watch/44447/need_more_room/
I get a kick out of seeing this particular Sign Twirler the past several weeks here in N. Phoenix’s 110 degree heat. She stands out there twirling away with her ice chest and umbrella.
The condos she’s twirling for are a complete joke. They’ve been complete for months now. They run in the 200k’s and are about 1000sq ft and next to a neighborhood full of rental homes, some crappy apartments, a kmart and mostly empty strip malls. 31st Ave and Greenway if anyone is familiar with the area. Real value should be no more than 90K.
For sale signs everywhere in Phoenix today. Not uncommon to see 4 houses in a row for sale even in established neighborhoods.
50k homes on MLS. I bet more like 70k including FSBO.
>>>31st Ave and Greenway if anyone is familiar with the area. Real value should be no more than 90K.
Not a completely awful area, but like many in the Phoenix area, it has not aged well. The regular house subdivisions often look tired and trashy after 15 years or so. I think that the prevalence of managed HOAs in the newer areas really helps to keep some of the trashiness down. Of course, nothing is going to save them from a severe price correction.
Potential lawsuit, sign twilzer dies from heat stroke. Realtor now held liable for unsafe working conditions. Direct link to over priced housing causing injury and death to low wage earners.
I know that area as I lived in the Phoenix area for two years. That is not a great neighborhood by any stretch. I think Phoenix is in real trouble, maybe worse than anywhere.
I heard a commercial on the radio this morning for M/I Homes (Washington DC). “Total savings this weekend of 5 million.” The best part was at the end of the commercial they said “Prices will not go any lower.” LOL.
http://www.mihomesbigsale.com/MIH_10787/index.cgi
Well I did notice today on Yahoo Real Estate the base price for houses for sale in 90277 zip code dropped by $30,000. That gives you a POS of 848 square feet. It’s a zip code that I have an interest in moving to one day. Prices are a little more than double what I’d pay though…
Received this by e-mail in SoCal:
June 23 to June 25–Move right into the Beazer home of your dreams with our incredibly low 1.875%* interest rate. Our rates don’t go any lower than this, so now’s the time to save tens of thousands of dollars and get into the home of your choice during our 72-hour only, special promotion!
*Loan program is a 5/6 adjustable rate with the 1st, 2nd, 3rd, and 5th year buy-down rate fixed at 1.875%, 4.875%, 5.875%, and 6.875% respectively, subject to adjustment thereafter based upon the 6-month LIBOR index plus a 2.25% margin. APR is 7.617%.
“*Loan program is a 5/6 adjustable rate with the 1st, 2nd, 3rd, and 5th year buy-down rate fixed at 1.875%, 4.875%, 5.875%, and 6.875% respectively, subject to adjustment thereafter based upon the 6-month LIBOR index plus a 2.25% margin. APR is 7.617%. ”
LOL! If this was a TV ad, I could see that old Fed-Ex dude going through this language in about 2.4 seconds, flat.
I’m on the North Shore of Boston. After a rapid inflation of inventory in the early spring, it appears that the number of homes on the market has begun to stay very steady. In my city, that number has been between 450 and 460 for nearly a month now and only fluctuates +/- 1 or 2 units every 5-7 days.
I get the feeling we have reached the seller/buyer stalemate phase. Also, I believe there is a great deal of “shadow inventory” — that is, sellers waiting for things to “improve” before they list. Whatever the case, the buyers are gone and I think there are a lot of very scared FBs sweating bullets in metro Boston.
Seattle is still pretty tight…inventory and sales are about the same as 2005, which was the biggest year on record. Prices are 50K to 70K higer then last year and climbing. It may be another year or two till we have a slowdown here.
Check out the above posters’ comments on the Seattle Bubble Blog. He’s a hoot and a half!
Hi Price Drop….in fact, I’d say you’re providing most of the comic releif on the Seattle Bubble site these days. Telling that prices have been plummeting since Jan…
Seattle Median Price Jan 06 - $376,995
Seattle Median Price May 06 - $415,000
Sorry…it’s not happening.
You should ask just about anyone on this blog how useless they think median price is as an indicator. Especially these days.
Median price is crap. Higher end homes coming down in price and selling can skew what the market is actually doing. Higher inventory and fewer sells equals price decreases. It is basic economics. However, Im sure supply and demand curves change for realtors. According to a realtor increased supply, will increase demand which, will increase price. Im sure that is what they think. I had one realtor tell me that supply and demand economics does not apply to property only consumer goods.
Prices in seattle have not “plummeted” since January. They have simply been selling below asking, sometimes by as much as 10-20%, which is a very easy thing to verify by checking tax records of solds.
As in the rest of the US, it’s going to take a lot more before prices can be considered to have “plummeted”.
1.2mil asking to 999K selling on a property that sold for 450K in ‘04, is not an example of a plummet, IMO.
Sorry Price Drop…wrong again. Houses in Seattle have been selling over asking:
Median May 2006 Asking Price: $467,690
Median May 2006 Selling Price: $470,937
see: Seattle, WA May 2006 MLS Recap
** As of 6/23/2006: All numbers are from the MLS and are deemed reliable but not guaranteed. 2,249 properties on the market with 497 showing price reductions. Days on market reflect number of days between listing date on MLS and close of escrow.
My own anecdotal evidence shows that sales haven’t slowed in the eastern suburbs. Almost every house I’ve seen go up in the last couple of months has sold within a week or two (with a few notable exceptions), including a way overpriced IMO 4bd/3ba advertised for $535 at the northern end of 164th Ave. Last winter there were houses sitting for 6 months at a time and lowering their prices to sell, but this spring things seem to be moving pretty quickly. I’m hoping it’s just a spring push and/or the Seattle lag. Prices really need to come down here.
I hope Tim’s blog comes back up soon.
I started keeping stats on inventory (this includes lots, condos, SFHs, etc.) back in May. I not looking for specifics at this point, just trends during the “hot spring buying season”.
I hit the same place for info just to insure the metrics use the same basis.
Here the numbers for RE for sale in King County (Seattle)
5/7/06-7302
5/16/06-7486
5/21/06-7665
6/11/06-8099
6/18/06-8154
6/24/06-8267
Yep, sure looks like everything is snapped up as soon as it comes on market with big bidding wars….just like 2005.
NOT!
Hi Moose….if you look back at the records (circa 2002), King County normally has about 12,000 homes for sale. So 8,000 is a very tight market.
When a storm is coming you may not see it for a while, but the barometer starts dropping. It gives you some indication of “the trend” even before the storm actually manifests.
I know from your previous posts on the Seattle Blog that you are somewhat of a (cautious) bull while I am an out and out bear. So be it. Our opinions mean very little….but numbers don’t lie and I sense a storm coming.
The Jan/May comparison is problematic. That’s a big jump, but May is probably always much higher than January in the same year. It could be much higher even in a down year where every month compares poorly to the same month of the previous year.
Ok…here’s the YOY data for Seattle:
May 06: $415
May 05: $368
May 04: $289
May 03: $280
Meshugy…please…take $1500 and take a course in economics at a near by college in Seattle. It would be great if prices went from $280 to $325 in three years, anytime throughout history. That would be healthy and reflect well on Seattle. But from $280 to $415, Something new and really good has to happen for it to rise furthur. ex..wages have highest overall rise in history…interest rates revisit 40 year lows. I just can’t believe you are looking at the numbers and still a bull…were you a psychology major?
Agree…this guy is a RE shill. I guess he is over here coz the Seattle Blog (his soapbox) is down for the count.
Looks like the work of the Liarreah minions….hired hackers.
Well, I’m really hoping that the reason the Seattle Blog is down is because Tim’s out of town, without computer access and just doesn’t know that “something happened” so hasn’t been able to get it up and running again.
That’s the best case scenario.
Worst case scenario: You are right Seattle Moose and it’s been hacked.
All along in Seattle, realtors and RE boosters have been screaming “Until people can’t sell for the amount they paid, the market’s still hot!”
Well guess what, increasingly there are examples of people putting homes on the market for less than they paid last year. There was a rather lengthy discussion of one such example on the Seattle Blog a couple days ago.
Since that’s a “benchmark indicator” up there, maybe the blog has been hacked.
I gues we’ll find out in a few days when Tim gets back.
Well folks we gotta give props to Meshugy. Dataquick RE numbers for King County for 1Q 2006 do indeed show an 12.6% increase in sales prices (68 of 73 zip codes are higher than 1Q 2005) at an aggregate drop in sales of 3.6% (45 of 73 zip codes are lower than 1Q 2005). Can’t paint Seattle with the Sacramento brush based on that.
Hey all you posters from Seattle above > Have you considered the fact that even if your inventory is down from last year,it does not mean that you have as many qualified buyers as you did last year .With the interest rates going up and speculators leaving markets , If demand decreases by 50% in one year ,even if you have fewer listings you might be in bad shape in terms of a correction coming soon.
Looks like inventory is up, not down (according to SeattleMoose):
5/7/06-7302
5/16/06-7486
5/21/06-7665
6/11/06-8099
6/18/06-8154
6/24/06-8267
Seems to me Seattle was a little bit behind the rest of the mega-bubble markets on the appreciation end (bubble blow-off) and it wouldn’t suprise me at all that Seattle would be peaking now. Obvious Realtor(tm) shilling aside, Seattle won’t write its own rules and won’t buck the larger trends. Just for the record Meshugy, you’re not headed into a “slowdown” as you put it. Its called a crash, and you ARE headed there, just a little later that’s all.
Actually, here’s the most interesting “new” development in the Seattle area:
Starting last week, in area “RE For Sale”booklets, some companies (Keller Williams for one) have begun putting only monthly payment amounts where the home price used to be.
There is no indication of the type of loan or DP needed to get that particular monthly payment, and there is no indication of the actual home price.
Other than that, things continue as normal with 25-30% of market price reduced in most zips, with a high of 50% reduced in one zip and a low of 10% reduced in another.
The condos are just starting to come on hot and heavy in Seattle with many new ones at pre-sale stage and others just having broken ground or in the early stages of building.
I’m keeping my fingers crossed that they finish these suckers in the next couple months- we could use the added inventory!
I think you’re right about the Seattle market. I live in South Snohomish County. IMO we will follow the CA market with about a 12 to 18 month lag. Like CA last summer, prices are peaking as inventory starts to build.
Personally, I wouldn’t buy into this market until prices revert back to where they were in 2001 unless, of course, rents doubled. Time will tell…
Yours is the correct analysis, imho. Most markets in CA peaked in August/September timeframe (a few still peaking.) WA appears to be 18 months behind the curve. Meshugy is an idiot to be citing YOY numbers, as we all know the serious flaws associated with that metric. Of course, once YOY starts looking ugly, Realtors(tm) will simply change the cited metric to YO2Y or YO3Y to make RE look like a good “investment” in the long run. Hmmm…come to think of it, this type of banker’s mischief is alot like what the Fed does with CPI/M3.
“‘We’ve also banded together with other Realtors, and the entire community has a Parade of Homes; showings of all the homes for sale,’ Gius said. ‘We all support each other’s open houses.’”
Yeah, like a couple of drunks propping each other up as they stagger down the street. Let’s see how long the comraderie lasts when the market really tanks and it’s every man for himself.
It is very important to offer incentives when you want to sell a $250k sh-tbox for $400k.
Centex has the “dot sell” going on again here in the inland empire. Last weekend Centex was doing the live remote gimmick with a local radio station so we drove by. No one at the remote, 4 cars in the parking lot. No excitement, just blah.
That’s a good one. They’ve got the morning zoo crew out trying to drum up business for new housing developments. Ha-ha. I thought these guys only showed up when new Jiffy Lubes or Cold Stone Ice Cream Palors opened up. This is very telling how desperate the HBs are getting.
Here is something interesting- Season Raider tickets when you buy this San Leandro Bay O Vista Home.
http://www.hbrhomes.com/listingdetail.cfm?ID=104446&BID=22
Gosh, for the price of this home, I would think it would be more like 5 years worth of Raider tickets…
how about a lifetime of tickets
No need for tickets. You’ll get to see all the games for free, as you hawk sodas and hot dogs on that second (or third) job that you had to take to pay for the house.
Just picked up a copy of the local paper. Here’s an ad:
‘Exceptional Village of Oak Creek Home - Only $222 per sq ft! $519,000, Adjacent homes selling in the $600,000’s.’
Not any more!
Ben here’s an eye-opener from the stock of the week (coming up), Lennar:
How about the customer who just bought the same model that you — the home builder — just knocked $120,000 off of?
In some markets, but not in Southwest Florida yet, Lennar/US Home is offering new buyers some assurance that their price is protected, meaning if the company sells a similar home nearby for a considerable discount, it would compensate that new buyer for the difference in prices.
Anybody have any idle speculation as to how Lennar would “compensate” the dozens of homeowners? It’s impossible that they would just start writing dozens of checks for $120K. I would have to bet that there would be a lot of strings attached — you have to sell your house and take a “loss”, etc.
A “good for 30 days” guarantee should cut their risk to a reasonable leve.
OT: Alan Abelson’s “Up & Down Wall Street” (Barron’s) has some thoughts on the bubble. Mentions possible downside of 20-25% or 40-60%, per Bard College’s Levy Economics Institute and HSBC, respectively. The Levy one mentions $3.8 - 4.78 Trillion… I thought housing couldn’t go down nationally? /sarc
Curses, it’s for “subscribers only”. FWIW, the Barron’s article two weeks ago didn’t do much damage to the HB’s that the general market wasn’t doing on its own.
The past month or so everything seems to be moving in tandem no matter what its relative merit. The only difference between one stock or sector and another is how far it moves before the next market-wide program trade hits the floor and everything reverses on a dime.
here’s the referenced part of Abelson’s column in Barrons:
NOT THE LEAST of reasons for taking a wary stance on housing is that there seems to be so much darn room on the downside. Boom doesn’t really begin to describe the extraordinary upswing now ending. As a recent report by HSBC on the industry observes, increases of 100%-150% in sales, starts, building permits and home-builder optimism from the bottom of a housing cycle to its peak are pretty much the norm, and the advances have tended to last four or five years. This one, in striking contrast, has gone on for some 15 years, with gains in the aforementioned indicators ranging from 130% to 300%.
So if it hasn’t been the mother of all building booms, it’ll certainly do until the real thing comes along. Besides the Fed’s extraordinary exertions, the bubble has been kept aloft and steadily inflated by a host of new mortgage gimmicks and financial engineering wonders, not a few of them dubious if not downright evil. As the mounting disenchantment with ARMs demonstrates, some of these cockamamie concoctions are coming back to bite the very souls they were designed to initiate into the pleasures of home ownership.
The flip and ugly side of the blazing boom in housing, the savvy chaps at HSBC point out, is that it’s still early days in the current downswing, which could easily go on for perhaps five years. And before it’s over, the decline could range to 40%-60%. Given those whopping gains that housing has racked up during its remarkable run, a 40%-60% give-back stacks up as serious pain.
Just how serious is the subject of another recent study, this one by the Levy Economics Institute of Bard College. By its reckoning, at the end of the third quarter of last year, U.S. household real-estate equity weighed in at slightly more than $19 trillion; subtracting total mortgage debt of $8.2 trillion leaves equity at slightly over $10.9 trillion. A 20% drop in housing prices would mean a loss in household equity of $3.8 trillion, a 25% drop a loss of $4.78 trillion. That’s “t,” remember, as in terrible.
Even these days, $3.8 trillion, much less $4.78 trillion, is not exactly chump change. That kind of hit would be more than sufficient to send the consumer reeling and the economy into recession.
And we’re not talking one of those feathery recessions that barely leaves a mark.
If sales are down 31% in OC last month over last year, How many millions of dollars in less sales would that be? And, would someone give me an actual example of a realistic price, a seller should list a house for, and a realistic price a buyer would actually pay for that same house? When an agent says, you must price your house right in order to sell it, what the hell does that actually mean?
May New Home Sales come out Monday at 10 AM EST and May Existing Home Sales are Tuesday at 10 AM EST.
The YoY price and/or volume comparisons will be brutal for the next three months as they will be comparing to the very tippy top of the bubble.
And Lennar announces 2nd quarter earnings Monday morning before the opening bell. With the Fed taking center stage a few days later, this could be a particularly brutal week for the homebuilders.
Or not. Such is the life of a short seller.
Cool. Earnings before the bell and conference call during the session. I hope they get a lot of questions about one of their subsidiaries not paying its contractors and that county in SoCal that might prohibit them from further building because they’ve had so many problems (water damage from bad roofs, green lumber as studs twisting and ruining the walls, etc.).
In Florida the builders are coming out full force. According to an article in the Sarasota Herald Tribune, Lennar homes is slashing prices. In some markets they are giving price guaruntees to buyers. If the price of their home goes down, Lennar will give them the difference.
Tampa, FL here. Girls all along Kennedy ave today at every large intersection (Westshore, Dale Mabry) holding signs saying “CONDOS: MOVE IN TODAY FOR $1″. The local neighborhood here has at least 20 for sale signs at the entrance. Even my neighbors commented on how many things seemed to be for sale around here.
Momon,
Are you sure you have that right??
I have lived in Tampa since birth. Girls walking down Kennedy blvd. aren’t usually selling CONDO’s. Are you sure that wasn’t CONDOMS for $1??
Yes i’m sure…..they had HUGE signs shaped like an arrow saying “CONDOS, move in today for $1″. Judging by the white t-shirts they were wearing with red shorts (and yes it was raining), they may have been willing to sell something else.
Almost took a picture, I will next weekend if they are back there again.