Housing Market

[RLLD 3,539]

This news that people should expect falling prices is only starting to sink in out there. Changing people's expectations is a slow process. But when it does sink in -- that is when we will start seeing real drops in prices. Right now we're still in a housing bubble and buyers think they are seeing "bargains" while sellers are holding out with unrealistic expectations. Once it really sinks in that prices are falling - and falling fast - the buyers will start expecting ever lower prices, and the sellers will either take their homes off the market or dump them before prices fall further.

 

Today's Housing Bubble Post - Prices Will Drop Now

 

 

If you were thinking about selling in order to gouge someone, the time is rapidly passing...

[kutulu 1,561]

I'm sorry your stepmother is a nympho.

[RLLD 3,539]

I'm sorry your stepmother is a nympho.

 

[edjr 5,717]

In about 12 months when all the recent home buyers are crying themselves to sleep in their tents at night, I'll be ready to buy.

[RLLD 3,539]

In about 12 months when all the recent home buyers are crying themselves to sleep in their tents at night, I'll be ready to buy.

 

 

[edjr 5,717]

Japan provides a nasty warning of what can happen when boom turns to bust. Japanese property prices have dropped for 14 years in a row, by 40% from their peak in 1991

 

 

[Brown Eyed Girl 1]

[redtodd 7]

What are you guys expecting for a drop?

 

Are you really expecting prices to drop by 50%? Or 5 or 10%?

[TimmySmith 2,782]

In about 12 months when all the recent home buyers are crying themselves to sleep in their tents at night, I'll be ready to buy.

 

And you think that Christians are delusional.

[Evil number 0]

 

Japan is a little different. when your population is shrinking then obviously there is going to be more houses than people. Our population is not shrinking.

[Ravens 03 0]

I just settled on the sale of my house today!!!!!!

 

 

[Brown Eyed Girl 1]

I just settled on the sale of my house today!!!!!!

 

Congrats.

 

That must feel pretty good.

[SUXBNME 1,354]

Prices not dropping in my area

 

Mebbe all you condo and double wide mobile buyers can get a good deal in some dump like Texas, but here in Nor Cal, the prices have been staying very close to the same. Still rising in some areas.

 

2 1/2 years ago I bought for 275,000.

3 houses down (same plan) just sold for 405,000.

 

Ask Jerryskids, my house is nothing special at all.

 

TNG would probably be able to second this.

[Brown Eyed Girl 1]

Prices not dropping in my area

 

Mebbe all you condo and double wide mobile buyers can get a good deal in some dump like Texas, but here in Nor Cal, the prices have been staying very close to the same. Still rising in some areas.

 

2 1/2 years ago I bought for 275,000.

3 houses down (same plan) just sold for 405,000.

 

Ask Jerryskids, my house is nothing special at all.

 

TNG would probably be able to second this.

 

That's pretty good, Sux. They are dropping here in Southern Cal, though. Not so good as we're trying to finish some building/improvements on the house so we can get it on the market asap. Not looking good as 2 other homes on the street are low-balling just to sell and get out.

 

[MDC 5,963]

I'm seeing condos in Center City Philly advertised in the mid 150s - that NEVER would have happened a year ago.

[Brown Eyed Girl 1]

I'm seeing condos in Center City Philly advertised in the mid 150s - that NEVER would have happened a year ago.

 

How does that compare to a year ago? Just curious.

[MDC 5,963]

How does that compare to a year ago? Just curious.

 

Can't say what the same places were going for a year ago, but for the last 4-5 years or so luxury condos - even in less desirable neighborhoods - were typically going in the mid-350s and a lot of those places are still vacant. Just the last few months I've started seen three ads (right on the building) in center city advertising condos in the mid-100s. I get the sense prices in general are really coming down.

[SUXBNME 1,354]

That's pretty good, Sux. They are dropping here in Southern Cal, though. Not so good as we're trying to finish some building/improvements on the house so we can get it on the market asap. Not looking good as 2 other homes on the street are low-balling just to sell and get out.

 

 

Sorry to hear that

What a couple of ###### neighbors...

Go burn their houses down in the middle of the night...That will teach them.

[Brown Eyed Girl 1]

Can't say what the same places were going for a year ago, but for the last 4-5 years or so luxury condos - even in less desirable neighborhoods - were typically going in the mid-350s and a lot of those places are still vacant. Just the last few months I've started seen three ads (right on the building) in center city advertising condos in the mid-100s. I get the sense prices in general are really coming down.

 

Gotcha. They sure are. Obviously those who bought their homes some time ago will make a profit by selling now, but if you're like me, who bought just shy of 2 years ago in a booming market, my home is valuing much higher now than when I bought it, but trying to get the highest dollar for it will be difficult in this falling market and I will most likely only break even considering the money that has been put into it just to make it livable!

 

Sucks.

 

Sorry to hear that

What a couple of ###### neighbors...

Go burn their houses down in the middle of the night...That will teach them.

 

I like the way you think, Sux!

[RLLD 3,539]

That's pretty good, Sux. They are dropping here in Southern Cal, though. Not so good as we're trying to finish some building/improvements on the house so we can get it on the market asap. Not looking good as 2 other homes on the street are low-balling just to sell and get out.

 

 

 

They arent low balling, they are being reasonable, asking for a more appropriate price, instead of gouging someone else.

 

kudos to them, even if they are doing it under duress, prices have to drop a bunch more before prices can come close to what they should be

[edjr 5,717]

I'm hearing it might be a LONG time before it goes the other way

 

people that got 5 year ARM 5 years ago are FOCKED.

[DanXIII 8]

I live in FL. Prices are STILL going up here...just not at the double-digit rates they have been in previous years.

 

FWIW, there are rumors circulating through the financial markets that the Fed is done raising interest rates and that the economy is slowing. We may not see the bubble *pop* that everyone is expecting after all...

 

In any event, I hope they can figure out a way to give us some property tax relief at the very least.

[RLLD 3,539]

I live in FL. Prices are STILL going up here...just not at the double-digit rates they have been in previous years.

 

FWIW, there are rumors circulating through the financial markets that the Fed is done raising interest rates and that the economy is slowing. We may not see the bubble *pop* that everyone is expecting after all...

 

In any event, I hope they can figure out a way to give us some property tax relief at the very least.

 

Actually, according to many economists in the news, its slowly bursting before our eyes, with significant fallout to occur for the next year or two.... Perhaps it hasnt hit your area yet, but it will, prices for building materials are already dropping... its just a matter of time

 

 

http://www.chicagotribune.com/business/inv...ssyourmoney-hed

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

http://usmarket.seekingalpha.com/article/17282

 

http://www.marinij.com/marin/ci_4373039

 

people that got 5 year ARM 5 years ago are FOCKED.

 

 

Deservedly so as well, thats what they get for contributing to a BS, overpriced, overvalues market....let them live on the street...

[edjr 5,717]

Actually, according to many economists in the news, its slowly bursting before our eyes, with significant fallout to occur for the next year or two.... Perhaps it hasnt hit your area yet, but it will, prices for building materials are already dropping... its just a matter of time

http://www.chicagotribune.com/business/inv...ssyourmoney-hed

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

http://usmarket.seekingalpha.com/article/17282

 

http://www.marinij.com/marin/ci_4373039

 

 

I saw on the news the other night. Nevada foreclosures are up %255 from last year this time. That's right. TWO HUNDRED FIFTY FIVE PERCENT

[RLLD 3,539]

I saw on the news the other night. Nevada foreclosures are up %255 from last year this time. That's right. TWO HUNDRED FIFTY FIVE PERCENT

 

I have been scouring the web news every day on this, and it is clear to me that this is only the start. People who fed this beast will now be devoured by it.

 

Particularly the builders, who were raping people for 4, 5 and 600k per house, yet refuse to drop their prices. I hope those pig fockers die in their own vomit...

[edjr 5,717]

Actually, according to many economists in the news, its slowly bursting before our eyes, with significant fallout to occur for the next year or two.... Perhaps it hasnt hit your area yet, but it will, prices for building materials are already dropping... its just a matter of time

http://www.chicagotribune.com/business/inv...ssyourmoney-hed

 

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

http://usmarket.seekingalpha.com/article/17282

 

http://www.marinij.com/marin/ci_4373039

Deservedly so as well, thats what they get for contributing to a BS, overpriced, overvalues market....let them live on the street...

 

I don't want to see anyone on the street, but I would like to laugh at them as they're being booted out of their 400,000k plus houses that will be worth 300,000 in 2 years.

[RLLD 3,539]

I don't want to see anyone on the street, but I would like to laugh at them as they're being booted out of their 400,000k plus houses that will be worth 300,000 in 2 years.

 

 

Two years......try six months WOOT

[edjr 5,717]

I have been scouring the web news every day on this, and it is clear to me that this is only the start. People who fed this beast will now be devoured by it.

 

Particularly the builders, who were raping people for 4, 5 and 600k per house, yet refuse to drop their prices. I hope those pig fockers die in their own vomit...

 

One thing is for sure, they'll never see their money.

[Belichick Is God 0]

What are you guys expecting for a drop?

 

Are you really expecting prices to drop by 50%? Or 5 or 10%?

 

If home prices drop 50% in this country, we all will be crying

 

Even the cheap or poor assdarts like edjr and ray lewis will be too

[edjr 5,717]

What are you guys expecting for a drop?

 

Are you really expecting prices to drop by 50%? Or 5 or 10%?

 

 

The Coming Housing Crash

Dean Baker

July 31, 2006

 

 

Dean Baker is the co-director of the Center for Economic and Policy Research. He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer.

 

All the economists who missed the stock bubble—this is almost all economists—are just about to be embarrassed again. Several reports released this week provide the strongest evidence yet that the housing bubble may finally be deflating.

 

Sales of new and existing homes are both down more than 10 percent from their peaks last year. Mortgage applications are down 20 percent. Sale prices have barely risen from the level of last year, and are actually down after adjusting for inflation. Inventories of new and existing homes both stand at record levels, and the vacancy rate for ownership units has also hit a new high.

This is a very different picture from a year ago, when housing was considered the best investment around. At that time, homes in the hottest markets would routinely sell the day they came on the market for more than the asking price. The result of this frenzy was an unprecedented run-up in house prices.

 

Ordinarily, house prices rise at roughly the same rate as other prices. Nationwide, house prices stayed virtually even with the overall rate of inflation from 1950 to 1995. However, in the last 10 years they rose by more than 50 percent, after adjusting for inflation. This created more than $5 trillion in housing bubble wealth.

 

This bubble sustained the economy through the 2001 recession and provided the basis for the recovery. The housing sector directly employs more than 6 million people in construction, mortgage issuance and real estate. The indirect effect of the bubble was even larger, as people took advantage of the rapidly growing value of their homes to borrow huge amounts of money. This borrowing binge supported rapid consumption growth in a period of weak wage and job growth. It also pushed the U.S. savings rate into negative territory for the first time since the beginning of the great depression.

 

But, it was inevitable that the bubble would eventually collapse. The record run-up in housing prices led to record rates of housing construction. With population growth slowing, the country was building homes far more rapidly than the market could absorb them. At some point, excess supply will put downward pressure on prices.

 

The weakening of the housing market was further assisted by an entirely predictable rise in mortgage interest rates. The Federal Reserve Board deliberately pursued a low interest policy to help the economy recover from the stock crash, pushing interest rates to their lowest level in 50 years. With inflation picking up steam due to the oil price spike, higher import prices, weaker productivity growth, and a stronger labor market, interest rates are rising back to more normal levels.

 

The exact course going forward will depend to a large extent on how rapidly interest rates rise, but the basic plot is easy to see. With housing construction still far outpacing the growth in households, there will be a further build-up of inventories. In addition, many people who had been holding homes in anticipation of price rises will rush to sell, now that the market is headed downward. The supply of housing will be increased further by duress sales by people who cannot afford the jump in monthly payments on their adjustable rate mortgages. In addition, the rapidly rising foreclosure rate means that many financial institutions will be auctioning off repossessed homes.

 

The increase in mortgage delinquencies and defaults is likely to put considerable pressure on financial institutions that are heavily involved in home mortgages. Given the poor quality of many recent loans, some collapses of major financial institutions are virtually inevitable.

 

The decline in housing prices will sharply limit the extent to which people can borrow against their home to support their consumption. This will cause savings to rebound from their current negative rates to more normal levels—at 6 to 8 percent of disposable income—but will be associated with a sharp falloff in consumption.

 

Together these effects virtually guarantee a recession, and probably a rather severe recession. Even worse, there is no easy route to recovery from a recession that results from a collapse of a housing bubble, just as there was no easy route to recover from the stock crash induced recession of 2001. Greenspan used the housing bubble to recover from that crash, because he saw no other mechanism. Unless Bernanke can find some other bubble to inflate, the recovery may be a long slow process. It took Japan almost 15 years to recover from the crash of its stock and housing bubbles.

The crash and post-crash world will not be pretty. Millions of people will lose their jobs and their homes. Unfortunately, the economists who led us down this path are not likely to be among the ones who suffer severe consequences.

 

Link

 

I also read the Japsn housing crash mentioned, prices over a 15 year period went down as much as 35%

 

If home prices drop 50% in this country, we all will be crying

 

Even the cheap or poor assdarts like edjr and ray lewis will be too

 

50%? that's a bit much, even if it's 25%, it will take a # of years.

[DanXIII 8]

I have been scouring the web news every day on this, and it is clear to me that this is only the start. People who fed this beast will now be devoured by it.

 

Particularly the builders, who were raping people for 4, 5 and 600k per house, yet refuse to drop their prices. I hope those pig fockers die in their own vomit...

 

To be fair, material costs have also skyrocketed in recent years due in no small part to the massive increases in fuel costs.

 

Ask drobeski what he's paying for copper wiring these days (if he can even find it).

[Cdub100 3,450]

Keep falling b!tches

[cday 0]

i've been saying this for some time, and people bashed me for it.

 

he who laughs last, laughs the loudest, you focks.

[edjr 5,717]

To be fair, material costs have also skyrocketed in recent years due in no small part to the massive increases in fuel costs.

 

Ask drobeski what he's paying for copper wiring these days (if he can even find it).

 

This is true.

[Electric Mayhem 35]

In about 12 months when all the recent home buyers are crying themselves to sleep in their tents at night, I'll be ready to buy.

 

You sure? I've never seen you ready to buy anything...

[Brick Tamland 0]

I'm hearing it might be a LONG time before it goes the other way

 

people that got 5 year ARM 5 years ago are FOCKED.

 

People who bought 5 years ago will be selling at a nice profit, even with a flat market.

 

People who got a Interest only 3 year ARM 2 1/2 years ago at 4% are focked.

[edjr 5,717]

People who bought 5 years ago will be selling at a nice profit, even with a flat market.

 

People who got a Interest only 3 year ARM 2 1/2 years ago at 4% are focked.

 

If you got a 5 year ARM, 5 years ago. What are you going to do now that the rate is going up? sell and buy an even more inflated priced house? You're assuming they can even sell their house. no guarantees today.

 

You sure? I've never seen you ready to buy anything...

 

might be more like 24 months now.. who knows how far things may fall?

[Electric Mayhem 35]

If you got a 5 year ARM, 5 years ago. What are you going to do now that the rate is going up? sell and buy an even more inflated priced house? You're assuming they can even sell their house. no guarantees today.

 

They will buy less house for less money, or rent until they want to get back into the market.

[tony hardware 0]

Not like it matters, but one thing about Japan that no one is mentioning is that it is a densely populated island composed almost entirely of rock with little room to build. Real estate there is scarce so it's understandable that they would experience that kind of boom, only to later have a correction.

 

Here in good 'ol Massachusetts, the prices in the Greater Boston suburbs have remained more or less consistent. They are not appreciating as a rate like that in recent years, but this is desirable property and it will continue to get above asking price. As for areas outside of Greater Boston, those suburbs 20 miles or more from Boston, home prices were inflated and there is a bit of a market correction here in Massachusetts as sellers are unable to find buyers, let alone get their exorbitant asking prices. There are plenty of homes available, but prices are still well above the national average. Boston is second only to San Francisco in property values. Basic 2BR condos in Cambridge, across the river from Boston, are going for mid 600s. For a condo! Outside of the city, condos can be around 450s. Homes in the Greater Boston suburbs, median home price is close to 700k. You have to travel 40 miles or more to find homes around 400s and they're modest. You want waterfront? Better be a multi-millionaire.

[Brick Tamland 0]

If you got a 5 year ARM, 5 years ago. What are you going to do now that the rate is going up? sell and buy an even more inflated priced house? You're assuming they can even sell their house. no guarantees today.

might be more like 24 months now.. who knows how far things may fall?

 

Rates for a 5 year ARM in 2001 are actually more than a 30 year fixed rate right now. Unless these people refinanced, they will actually have a lower payment after their ARM expires.

 

I live in Chicago, and many people who bought condos 5 years ago and paid 250k-300k are sitting on property appraised between 550k-600k or more. Although that is almost 15%/year, properties haven't been as overvalued here as on the coasts. The bubble bursting will be painful for these people, but not life altering. SoCal, on the other hand.....