i read in the journal a few weeks ago (maybe it was businessweek, can't remember) that robert schiller and a company (perhaps his?) is working on some futures contracts on real estate.
basically you are making bets about the median housing prices in certain markets. i think they will start with san fran, new york, and boston. expanding into other cities and then baskets of real estate.There is a new factor entering into the equation. The price of the commute to where you work is becoming an increasingly important factor in your overall cost of living.
Where after tax calculations needed to be done to decide whether it was better to rent or own, now after commute calculations will be needed to determine whether a more expensive house close to a metropolitan center is a better deal than a less expensive house in the suburbs. Not to mention the commute time.
X
09-21-05, 09:40 PM
<a href=http://money.cnn.com/2004/08/06/real_estate/investment_prop/hedging/>here is the story</a>That sounds pretty useless for anybody but a real speculator.
jiggawhat
09-21-05, 09:42 PM
Hey X, you gave me a good idea of adding a commute calculator onto my website.
Thanks!
ChiTownAbs, Inc
09-21-05, 09:48 PM
That sounds pretty useless for anybody but a real speculator.
how? you can buy puts on the median price. if the puts are excercised, then real estate values have declined and your puts have kicked in.
kvrdave
09-21-05, 11:51 PM
Your puts have kicked in :grunt:
X
09-26-05, 01:13 PM
Looks like it's still going strong...
Existing home sales rise in August
Sep 26 11:52 AM US/Eastern
WASHINGTON (Reuters) - Sales of existing U.S. homes rose 2 percent in August to the second highest level on record, a trade group said on Monday.
Sales of previously owned homes increased to a seasonally adjusted 7.29 million unit annual rate last month from July's downwardly revised 7.15 million unit pace, the National Association of Realtors said. That figure includes both single-family homes and condominiums.
Hurricane Katrina did have an impact on sales, but NAR said it would not be able to quantify the effect for several months.
Analysts had expected overall sales to fall to a 7.11 million unit annual pace from the originally reported 7.16 million clip in July.
The national median home price rose to $220,000, up 15.8 percent from a year ago, the report showed. That was the largest annual increase in prices since July 1979.
The inventory of homes available for sale rose 3.5 percent to 2.86 million existing homes. August's level equates to 4.7 months' supply at the current sales pace.
Stubbornly low mortgage rates have helped sustain the rally in housing, creating robust demand that has driven prices up by double-digit percentages in some areas and led some analysts to worry that the market was a bubble set to burst.
Single-family home sales rose 1.9 percent to a 6.35 million unit pace from July's 6.23 million unit pace. Condo sales climbed 2.2 percent to a 942,000 unit rate from a 922,000 unit pace in July.
Sales of previously owned homes fell 0.4 percent in the South, but rose 5.6 percent in the West, 1.9 percent in the Midwest and 1.7 percent in the Northeast.
SpaceBoy
09-26-05, 04:04 PM
This has to be regional. I'm looking now in MA, and they have the most houses listed in the last 25 years... So, I"m told.
Half the houses I have seen, have been on the market upwards of 100 days. So I think it's slowed down a great deal, at least here in MA. I'm even seeing places with 60k price drops since going up on the block < 100 days.
We've been hitting the open houses and stuff with our buying realitor, and half the time we look at a place, there is another right across the street forsale. rotfl
The Bus
09-27-05, 07:52 AM
This has to be regional. I'm looking now in MA, and they have the most houses listed in the last 25 years... So, I"m told.
Half the houses I have seen, have been on the market upwards of 100 days. So I think it's slowed down a great deal, at least here in MA. I'm even seeing places with 60k price drops since going up on the block < 100 days.
We've been hitting the open houses and stuff with our buying realitor, and half the time we look at a place, there is another right across the street forsale. rotfl
The NYT had a good article saying that the people who will first see the bubble pop are agents and buyers and sellers on the street, not analysts. Your observation may prove true when official reports are released in a couple of months.
al_bundy
09-27-05, 10:14 AM
my wife just started doing RE part time and the agent she works for told her that thing have slowed down this year compared to last year
atari2600
09-27-05, 12:07 PM
man i hope it doesnt peak. just bought my first condo although its not primarily for investment. even if it does crash i hope i can stay long enough so that i withstand the bad times.
al_bundy
09-27-05, 12:22 PM
long term housing is always a break even
if you add up all the money you spend on mortgage interest, insurance, taxes, maintenance over 10-15 years than you don't make that much of a profit if any. but it's better than renting since you build zero equity when you rent.
It also depends on location. My brother lives in the midwest and in his area things are flat to slightly down over the last few years because there is land as far as the eye can see and no restrictions on building.
X
09-28-05, 11:25 PM
It appears there are regional aspects to the market slowing down. I've heard parts of Southern California are cooling. I've also noticed some homes having reduced asking prices around here, although this article seems to say that's not the norm.
I don't attribute longer selling times or slightly reduced pricing to the market being bad, rather to people's expectations of being able to ask exorbitant prices not being realistic. Prices of sold properties haven't gone down, instead they keep rising. People are still willing to wait for their price instead of dumping property. That's one of the factors that helps stabilize real estate prices.
San Francisco-area home prices hit new high
Median price paid for a home climbs to $619,000
Updated: 3:17 p.m. ET Sept. 14, 2005
SAN FRANCISCO - Spurred by strong demand and continued low mortgage interest rates, prices paid for homes in the San Francisco Bay area rose to a new high in August and home sales in the region remained at near-record levels, according to a report released Wednesday.
The median price paid for a home in the nine-county region, which includes San Francisco and the Silicon Valley high-technology hub, rose to $619,000 in August, an increase of 2.1 percent from July and a 19-percent jump from a year earlier, according to the report by DataQuick Information Systems.
Home prices in the San Francisco Bay area, which boasts one of the strongest housing markets in the United States despite the economic shock to the region from a prolonged high-tech slump, have posted double-digit percentage increases each month for 21 consecutive months, the La Jolla, California-based real estate information service noted.
According to DataQuick, 12,154 new and resale houses and condominiums sold in the San Francisco Bay area last month, marking an increase of 6.0 percent from the prior month and a decrease of 4.1 percent from a year earlier.
Year-earlier sales were the strongest of any August in the San Francisco Bay area, according to DataQuick’s records, which date to 1988.
According to DataQuick, the region’s housing market is not showing signs of the slowdown many analysts expect. They have predicted the market will cool because increases in the area’s home prices in recent years have outstripped personal income gains of potential home buyers.
“We’re a bit surprised at how stable the market is in all categories. Usually one segment of the market will be outperforming the others. Right now, though, the same trends apply to all parts of the market from entry-level on up to the prestige market,” said Marshall Prentice, president of DataQuick.
“This stability means that the market will probably stay strong at least through the end of the year,” Prentice said.A study just came out that said a family of four needed an income of over $55,000 just to survive here.
kvrdave
09-28-05, 11:28 PM
I just had 3 REPOs come through the office in the last 2 days. Currently (and I'm in a miniscule market) I am working on 8 total. Normally, I am working on maybe 1. But, there are lots of buyers for them still, and the reason they go back to the bank is varied (divorce, death, lost job, moved, etc.). I would guess that the slim majority of them are people who just bought more than they could afford simply becuase they could qualify for that amount.
al_bundy
10-03-05, 09:47 PM
Drudge is saying that tomorrow the NY Times is running a story about a RE slowdown that is popping up in all the hot markets
X
10-03-05, 10:08 PM
That's what I like. Headlines to headlines of headlines.
al_bundy
10-03-05, 10:11 PM
most likely they are chasing a story after the hurricanes to sell papers
earlier this year they had a story about how this year's market wasn't as hot as 2004 and 2003
Aphex Twin
10-04-05, 02:15 AM
A study just came out that said a family of four needed an income of over $55,000 just to survive here.
I don't see why any couple making less than $100,000 combined would want to live in SF, unless I guess they wanted to live in Castro, but then they could always move to West Hollywood.
heimerSWT
12-20-05, 11:46 AM
Past the peak?
http://www.fortune.com/fortune/investing/articles/0,15114,1140768,00.html
The Top 100 Real Estate Markets: Is the Party Over?
Well, not everywhere. FORTUNE asked Moody's Economy.com and Fiserv CSW to analyze home sales data for the country's 100 largest metro regions. They ranked each area by its projected price change for 2006. No. 1? San Antonio. Dead last: Las Vegas.
I just bought my first house in San Antonio, this year. The only way I can see this hurting me is through higher property taxes--and it will, since my taxes are about 3.5%.
atari2600
12-20-05, 03:16 PM
doesnt texas have no income tax or something? that helps.
heimerSWT
12-20-05, 03:44 PM
doesnt texas have no income tax or something? that helps.
True, but I have lived in Texas my entire life, so I am used to not paying state income taxes. The higher property tax levies will increase my monthly mortgage payment each year, and that will be a documented increase.
Aphex Twin
12-20-05, 03:52 PM
$71,000 for a house in McAllen-Edinburg-Mission, Texas? That's a lot less than a lot of people's cars here!
VinVega
12-21-05, 12:07 PM
Mortgage applications fall to 11-month low (http://news.yahoo.com/s/nm/20051221/bs_nm/economy_mortgages_dc)
By Julie Haviv
1 hour, 1 minute ago
NEW YORK (Reuters) - U.S. mortgage applications fell to an 11-month low last week on a drop in demand for loans to buy homes, suggesting a slowdown in the housing market, according to industry data on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week to December 16 fell 4.0 percent to 594.6 from 619.3 the week before.
The group's seasonally adjusted index of applications for mortgages to buy homes fell 5.2 percent to 453.1 from the previous week's 477.9.
The index is considered a timely gauge of U.S. home sales.
"Housing has passed its peak," said Robert Brusca, chief economist at Fact and Opinion Economics.
The jury is still out on whether the U.S. housing sector will wind down gradually from its unprecedented boom of recent years or contract sharply and hurt the overall economy.
This week's housing results have been mixed.
In addition to falling loan demand, U.S. home builder optimism fell in December to its lowest since April 2003, according to the National Association of Home Builders.
On the other hand, the government said housing construction accelerated more than expected in November, helped by mild weather, as housing starts rose 5.3 percent from October to an annualized 2.123 million units.
OVERALL DEMAND FALLS
Total loan applications dropped to the lowest since the week ended January 7, when the index reached 587.8, although home borrowing costs fell for a second straight week.
Interest rates on 30-year fixed-rate mortgages, excluding fees, averaged 6.22 percent, down 0.06 percentage point from the previous week's 6.28 percent.
The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47 percent in late June, but below its 6.33 percent high in the week of November 11.
Rates on one-year adjustable-rate mortgages decreased to 5.41 percent from 5.50 percent.
The group's seasonally adjusted index of refinancing applications dropped 1.6 percent to 1,418.1 compared with 1,441.8 the previous week. Volume was at its lowest since the week ended June 25, 2004, when the index reached 1,386.9.
Lateralus
12-23-05, 10:25 AM
New Home Sales Plummet in November
By MARTIN CRUTSINGER, AP Economics Writer
7 minutes ago
WASHINGTON - Sales of new homes plunged in November by the largest amount in nearly 12 years, providing the most dramatic evidence yet that the red hot housing market over the last five years is starting to cool down.
ADVERTISEMENT
The Commerce Department reported Friday that new single-family homes were sold at a seasonally adjusted annual rate of 1.245 million units last month, a drop of 11.3 percent from October, when sales had surged to an all-time high.
Last month's decline was even bigger than the 8.7 percent drop-off that Wall Street analysts had been expecting. While sales of both new and existing homes are still on track to set records for a fifth straight year in 2005, analysts are forecasting sales will decline in 2006 as the housing boom quiets down.
Analysts are looking for home sales to dip by around 6 percent next year under the impact of rising mortgage rates. Analysts believe that house prices, which had been soaring at double digit rates, will moderate as well.
Some of that price moderation was evidenced in the November report, which showed that the median price of a new home sold was $225,200 last month. That was up just 0.3 percent from November 2004, the weakest year-over-year price change in two years. The November median price was down 4.1 percent from the October median sales price of $234,800.
In other economic news, the Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods jumped to a record $223 billion in November. That was a 4.4 percent increase from October, representing the largest percentage advance in six months. Orders for durable goods had risen 3 percent in October.
The gain in demand for durable goods was far above the 1.1 percent increase Wall Street analysts had been expecting. But the strength was concentrated in a surge in demand for commercial aircraft, which shot up 133.8 percent to $25.9 billion from $11.1 billion the previous month.
Outside of this area, manufacturing demand was weak. Excluding transportation, durable goods orders dropped by 0.6 percent, the third straight monthly decline in these categories.
Some economists are worried that housing prices in some areas have been driven higher by a speculative frenzy that could see prices plunging as sales slow in the hottest markets. That scenario would evoke memories of the sharp declines that occurred when the stock market bubble burst in early 2000.
But other economists contend that housing is unlikely to exhibit the same collapse that the stock market did although they believe that the declines in sales expected next year will act as a drag on the overall economy.
By area of the country, sales were actually up by 13.4 percent in the Northeast, the biggest percentage increase in this region since January 1994.
However, sales fell in all other areas, led by a 22.1 percent drop in the West, the biggest decline in this region since February 1995. Sales were down 18.3 percent in the Midwest and fell 5.5 percent in the South.
The 4.4 percent rise in orders for durable goods, items expected to last at least three years, was the largest one-month advance since a 7.3 percent rise last May.
Analysts had expected a big gain in aircraft orders because of the sales success Boeing Co. had at the Dubai air show. Analysts said that Boeing booked 148 new plane orders for the month compared to 36 orders in October.
Orders for all types of transportation products were up 15.6 percent as the strength in commercial aircraft was offset by a 5.7 percent drop in orders for motor vehicles and parts and demand for military aircraft fell 44.3 percent.
Orders for non-defense capital goods, seen as a good barometer of business plans to expand and modernize, rose by 19.6 percent, but all of that strength was in the surge in aircraft orders. Excluding aircraft, non-defense capital goods actually fell by 2 percent last month.
slop101
12-23-05, 10:47 AM
I just want to point out that this real estate "bubble" is actually world-wide - any desirable home in almost any westernized country is "overpriced" in relation to other expenses. That's why I don't think that this is a bubble per se.
DodgingCars
12-23-05, 11:51 AM
I just want to point out that this real estate "bubble" is actually world-wide - any desirable home in almost any westernized country is "overpriced" in relation to other expenses. That's why I don't think that this is a bubble per se.
Well, it's only a bubble if it pops. Anytime you hear someone call it a bubble, it's really their prediction of the future. :)
Certain markets are incredibly over-priced though. LA, which is usually higher than other areas because of both high demand and low supply (with little room for more building except on the extreme outskirts).
But LA is still incredibly overpriced when compared to incomes. To buy an average home, the household income would have to be about $120k a year. Yet the true med. income is probably closer to $40-60k a year. You have 90% of the buyer priced out of the market. How long can you sustain prices that high when no one can buy?
al_bundy
12-26-05, 11:45 PM
I'm typing this from Larimer County in Colorado and fly back to NYC tomorrow. Last time I was here was 1 1/2 years ago and a lot of things changed. New construction everywhere. Boulder has growth limits so everyone is building 20 miles north of Boulder. Home prices up too. I have family here who is in the construction business and they say a lot of people from California are moving here. I saw a model home today and the salesperson said that there were a few price hikes. When I got back I checked the public records of the development and it looks like prices were cheaper 6 months ago as he said, but it's hard to tell because of all the upgrades they offer. And ownership information looks like mostly homeowners buying with a few investors.
http://graphics8.nytimes.com/images/2006/02/17/business/17condo650.jpg
More than 20 percent of the 352 condo units at the Jade Residences at Brickell Bay in Miami are on the market.
[b]Farewell, Condo Cash-Outs
By MOTOKO RICH
When developers in Arlington, Va., threw a party 18 months ago to showcase plans for Clarendon 1021, a condominium development that had not yet been built, 3,600 prospective buyers stood in line just for the chance to book reservations to bid on the apartments.
Now, less than a year after the building opened, speculators in this and other buildings are putting dozens of units on the market at the same time, causing asking prices and profits to slip.
Of 23 investors who sold since Clarendon 1021 opened last summer, the three most recent sellers actually lost money, after paying all fees, and average profits in the building have declined since August, said Frank Borges LLosa,) owner of FranklyRealty.com.
The Great Condo Gold Rush is fading from memory and the Great Sell-Off has begun. "Money Down! Motivated Seller, Want More? Just Ask!" screamed an investor's online advertisement last week for a one-bedroom apartment in Clarendon 1021 that had never been lived in.
"I hate it when people say prices can never go down," said Mr. LLosa, a resident of the building. "The speculators make the profits more volatile."
Over the last few years, real estate speculators looking to make a quick gain also snapped up preconstruction condos in Chicago, Miami and San Diego. With prices rising by more than 20 percent a year, short-term buyers figured that by the time the condos were ready to occupy, they could sell them without ever moving in, clearing thousands of dollars in profits.
But as more speculators look to cash out in recently hot condo markets around the country, some economists say they could put even more downward pressure on prices in those buildings where for-sale listings are swelling. In Miami, at the Jade Residences at Brickell Bay, more than 20 percent of the building's 352 units are on the market. In San Diego, about a third of the 96 units in the Alicante, a condominium that opened last fall, are listed for sale and sellers are already starting to cut asking prices.
In Donald Trump's luxury condos at 120 Riverside Boulevard in Manhattan, owners of more than one-fifth of the building's 250 units are currently marketing their apartments. With so much inventory, said Ilan Bracha, a broker with Prudential Douglas Elliman in New York, "the buyers are coming in, checking the best views and then they negotiate. This is the reality."
While investors made up only 9.5 percent of residential mortgages nationally in the 10 months through October, according to First American Corporation's LoanPerformance, a San Francisco mortgage data firm, the numbers are much higher in places like San Diego, where investors represented 13.5 percent of residential mortgages, and Miami, where they were 16 percent.
Hans Nordby, research strategist at Property and Portfolio Research in Boston, said those numbers underreport the real level of speculation in those markets because many buyers disguise their intentions when they get their mortgages. As those speculators flood the market, he said, they will put pressure on other sellers to cut prices, too. "A rising or sinking tide affects all boats," Mr. Nordby said.
Still, a sell-off in speculative condos is unlikely to start a widespread housing crash, because condos were more overbuilt than single-family homes during the recent boom, said Joseph Gyourko, professor of real estate and finance at the Wharton School of the University of Pennsylvania. But weakness in the condo market, he said, "is a consistent indicator that the great boom has really ended."
For those buyers who had dreamed of quick riches, the change in the market has come as a sobering lesson. A little over a year ago, Shabana Qureshi, a 26-year-old engineer, put deposits down on two condos in Arlington. "My friends were making hundreds of thousands of dollars off of properties," Ms. Qureshi said. "I just thought I'll take this risk now and not think about it too much, and once the time comes I can either sell it or use it depending on my needs."
She moved into a one-bedroom condo at Clarendon 1021 with hardwood floors, granite kitchen countertops and a heated pool on the roof. But having taken a pay cut with a new job, she can no longer afford the mortgage and maintenance fees, which are almost $3,000 a month.
Last week, she put the condo, for which she paid $438,000, on the market for $470,000 and plans to move into the other condo she bought in Arlington. She is selling the Clarendon condo herself to save on the real estate commission. But even if she gets her asking price, she figures she will break even after closing costs.
Having scrimped to buy at what she said she believed was the peak of the market, Ms. Qureshi said she regretted her investments. If she had to do it all over again, she said she would have spent more money on travel and a new car. "I would have been more carefree and invested once I had a family," she said.
In the last few years, speculators were drawn to real estate because of double-digit appreciation. Nationally, median condo prices increased by nearly 13 percent, to $218,200, in 2005, according to the National Association of Realtors. But earlier this month, the group, which is based in Washington, forecast a slowdown in the rate of appreciation, saying that median home prices for all housing types — single family, townhouses, condominiums and co-ops — would rise by only 5 percent this year.
Already, the rate of appreciation in some of the hottest markets for speculators has slowed. In San Diego, the median home price (the exact middle of all prices) rose at an annual rate of just 2.5 percent in January, compared with 20 percent a year earlier, according to DataQuick Information Systems, a research firm.
Last week, in a sign of a broader slowdown in the housing market, Toll Brothers, the luxury home builder, said orders for new homes fell by nearly 30 percent in the three months ended Jan. 31. On Monday, KB Homes also said that orders were down significantly and that more buyers were canceling contracts.
At the same time, developers are still building condos in Miami, New York and Chicago, so speculators trying to sell will also have to compete with new units coming on the market.
The slowdown will affect all sellers, of course, but speculators may be more acutely affected if they were expecting speedy profits or are paying mortgage and maintenance costs on empty apartments. In some cases, even if they rent them out, the rents will not cover their costs.
This is not the first time that condo markets have been influenced by investors. In the late 1980's, developers converted thousands of condo units in the Northeast and many of them were bought by speculators, said Karl E. Case, an economist at Wellesley College. Many of those investors, he said, ended up losing money when they sold in the early 1990's. "It was ugly," he said.
More experienced investors take a philosophical view of what they see as inevitable setbacks. R. Dawn Stahl, a lawyer in San Diego who bought two apartments in the Alicante, is now trying to sell both of them.
But in a city where there are about 6,200 condos for sale, up from about 3,100 this time last year, according to the San Diego Association of Realtors, it has been difficult to lure buyers. Ms. Stahl has yet to receive any offers, so she has already lowered her asking price on one of the listings from $650,000 to $599,000.
She paid $499,000 for that two-bedroom apartment and said she believed she would make a small profit after paying commissions and capital gains taxes. But if she cannot sell within a few months, she will rent the apartments out instead.
"I knew that was a risk that I took," Ms. Stahl said.
But a reason that a speculative sell-off is not likely to lead to a bursting bubble is that unlike stocks, where investors can panic and sell large volumes in a matter of hours, owners of real estate will only slash prices so far. "People resist and don't sell," said Mr. Case. "It tends to stabilize prices."
A year and a half ago, Erez Abkzer, who owns a window treatment business in New York, signed a contract for a one-bedroom condo facing the river in 120 Riverside for $850,000. "The market was booming and I decided to jump on that wagon," he said.
He closed on the apartment last month and immediately listed it for $1.1 million. He said he would rent the apartment rather than lower his price. "Otherwise it would all be in vain," Mr. Abkzer said. "I won't make money on it."
Some brokers say that speculators have unrealistic profit expectations. "I think a lot of sellers are saying I should make X percent," said Eve Thompson, an agent with Long & Foster in Fairfax, Va. "But your chances of being able to do that are as good as going to Oracle and telling them you want more for your stock."
In Miami, where there appears to be a large overhang of investor properties, sellers are still making profits, said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors. But with the inventory of available condos having jumped from about 5,400 listings at the end of December 2004 to about 12,750 now, he said, asking prices have come down in the last three or four months. Mr. Shuffield said he was confident that there would eventually be takers for most of those condos because of the influx of buyers from Latin America and Europe as well as baby boomers from the Northeast.
But some real estate watchers say there is evidence that demand is starting to slacken in Miami. According to Michael Y. Cannon, managing director of Integra Realty Resources-South Florida, a market analyst, the volume of sales of existing condos declined by 9.6 percent in South Florida between 2004 and 2005.
For now, the bumper crop of properties is a boon to buyers. In San Diego, Tom Hinks, a 21-year-old who is looking to buy a condo downtown, has realized he can take his time.
His approach might scare some sellers. Since Mr. Hinks started looking four months ago, he has viewed 30 condos. "I've actually liked quite a few of them," he said. "But every day it seems like the prices are starting to trim down so I don't want to pay too much."
<hr>
Servers her right for buying a condo in the middle of the boom... just as I (and many of you) predicted. I don't think this will spill over into regular housing nationwide.
kvrdave
02-17-06, 12:21 PM
That's the problem, though....how do you know you are buying in the middle of the boom instead of at the near begining?
The Bus
02-17-06, 01:01 PM
That's the problem, though....how do you know you are buying in the middle of the boom instead of at the near begining?
When do you it "just to get into real estate" without having a plan because it's what the latest Fortune article talked about.
grrrah
02-17-06, 01:35 PM
When do you it "just to get into real estate" without having a plan because it's what the latest Fortune article talked about.
:confused: engrish?
I think you are asking, when to do it, just to get into real estate?. Like 401k, if you are in it for the long run, it shouldn't matter that much even if they last a couple of years. everything will recover eventually over 30 years or whatever. People that will feel the hit are the short term investors that try to flip the houses quick.
I just hear on the radio this morining over here, they said that housing prices have gone down about 3-4% over the past several months. then they followed that up by saying even with the drop, the prices are still up 13% from last year.
The Bus
02-17-06, 01:43 PM
:confused: engrish?
I think you are asking, when to do it, just to get into real estate?. Like 401k, if you are in it for the long run, it shouldn't matter that much even if they last a couple of years. everything will recover eventually over 30 years or whatever. People that will feel the hit are the short term investors that try to flip the houses quick.
I just hear on the radio this morining over here, they said that housing prices have gone down about 3-4% over the past several months. then they followed that up by saying even with the drop, the prices are still up 13% from last year.
s/do you/you do
BadlyDrawnBoy
02-17-06, 01:48 PM
sudoku?
Cusm
02-17-06, 01:56 PM
sudoku?
I think you are looking for kvrdave's son's middle name thread.
EddieN
02-17-06, 01:58 PM
Flippers can suck it.
Duran
02-17-06, 02:21 PM
For those buyers who had dreamed of quick riches, the change in the market has come as a sobering lesson. A little over a year ago, Shabana Qureshi, a 26-year-old engineer, put deposits down on two condos in Arlington. "My friends were making hundreds of thousands of dollars off of properties," Ms. Qureshi said. "I just thought I'll take this risk now and not think about it too much, and once the time comes I can either sell it or use it depending on my needs."
She moved into a one-bedroom condo at Clarendon 1021 with hardwood floors, granite kitchen countertops and a heated pool on the roof. But having taken a pay cut with a new job, she can no longer afford the mortgage and maintenance fees, which are almost $3,000 a month.
Last week, she put the condo, for which she paid $438,000, on the market for $470,000 and plans to move into the other condo she bought in Arlington. She is selling the Clarendon condo herself to save on the real estate commission. But even if she gets her asking price, she figures she will break even after closing costs.
Having scrimped to buy at what she said she believed was the peak of the market, Ms. Qureshi said she regretted her investments. If she had to do it all over again, she said she would have spent more money on travel and a new car. "I would have been more carefree and invested once I had a family," she said.
Dumbass.
Edited to fix quote tag
The Bus
02-17-06, 04:26 PM
Dumbass.
Exactly my point. A little over a year ago was when any sane person could tell that the real estate market was just a biiit too hot. Condos are risky even in a normal market.
al_bundy
02-26-06, 08:16 PM
I went out to the suburbs to the cemetery this morning and on the way back my wife wanted to go check out a new development we saw from the road.
http://thevillageswestathuntington.com/home.htm
The sales person said that everything was sold except the townhomes that start construction soon.
She said they range in price from $700,000 to $800,000. I almost choked when she said that. Than when she said that they come with Kohler stuff, and overmount sink and carpeting I almost broke out laughing. You have to be crazy to pay this kind of money for junk you can get from Home Depot. I can buy a $380,000 house built 50 years ago a few miles away in the same school district and spend $300,000 on top of the line stuff to make it better and my way.
Did some searching on Realtor.com and they are selling a3100 square foot home in the development for $1,125,000. Did some more searching and the same developer built a similar home less than a mile away in an earlier development in 2001 that the owner is now selling for $975,000.
Looks like a soft landing rather than a bubble bursting.
Housing Slowdown Ripples Through Economy
Mar 06 3:01 PM US/Eastern
By DAVID KOENIG
AP Business Writer
The five-year housing boom is indeed over, judging from growing statistical evidence and the performance of some of the nation's leading builders, and the slowdown is already rippling through the economy.
In the last week, the Commerce Department reported that January sales of new single-family homes fell 5 percent _ the fourth decline in seven months _ and the backlog of unsold new homes hit a record. And the National Association of Realtors said used home sales slipped 2.8 percent in January, the fourth straight drop and 5 percent below January 2005.
Builders also reported a few hiccups. Upscale Toll Brothers Inc. said signed contracts in the November-January period fell 21 percent from a year ago, and KB Home reported more buyers backing out of contracts.
Still, the prospect of a housing slowdown appears less frightening than it did a few months ago, according to those who track the industry. There seems to be little concern that a much-touted housing bubble will lead to a collapse in sales and prices.
New Federal Reserve Chairman Ben Bernanke said last month housing would enter a moderate slowdown but not a crash.
William Mack, a housing analyst for Standard & Poor's, predicted "a soft landing. The overall market is just taking a step back."
Explanations for the recent cooling-off vary. Many people bought homes during the past five years and are staying put. Some analysts blame a decline in consumer confidence. And interest rates have been rising, especially for adjustable mortgages that allowed people to buy more expensive homes than they could have afforded with a 30-year loan.
"We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed," said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation's largest private builders.
Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers couldn't command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary.
Builders don't like to cut prices _ it angers customers who paid more _ but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives ranging from financing help to free upgrades like swimming pools and granite countertops. Some equal 10 percent of the home's list price.
The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the National Association of Realtors. Few analysts expect a sharp drop in national averages, although they say there could be further declines in some areas that have been among the hottest markets in recent years.
David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area "have the largest potential for a price slowdown."
The rising prices in those markets were fed by speculators who bought homes intending to "flip" or sell them for a quick profit, Seiders said. "The biggest fear I have is investor-owned units coming back on the market in large numbers," he said.
Analysts said markets in Florida and the Carolinas seemed to be holding up well. Hovnanian Enterprises Inc. reported last week that home contracts jumped 61 percent in the Southeast but fell nearly 11 percent in the Southwest and 37 percent in the West during the November-January period. The builder's profit was flat with a year earlier.
The slowdown that is showing up in national statistics hasn't reached all parts of the country.
"I've never seen a market as good as this," Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. "Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes."
Mishler, president of the local builders association, says Texas markets are holding up because they are affordable _ the median price in Dallas is $145,000 compared to the national average of $213,000. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.
By price, the middle and upper ends of the new-home market did best in with solid increases in everything above $200,000, reflecting strongest markets were in high-priced areas along both coasts. That pattern mostly continued in January, although there was a dip in the $400,000 to $750,000 segment compared to January 2005.
Housing has played a major role in the economic recovery since 2001, so even slower growth in home sales and prices could have major repercussions.
Asha Bangalore, an economist for The Northern Trust Co. in Chicago, estimates housing created 43 percent of all new jobs from late 2001 until mid-2005. That included the obvious, such as jobs in construction and mortgage services, but also retail and service jobs that were created because consumers tapped their rising home equity to buy more things.
"The housing slowdown that we are seeing is very modest, not alarming, but I think the ripple effects are going to be enormous because of the employment factor," she said.
For now, home builders are busy finishing the houses that customers ordered last year. In a sense, their 2006 results are already on the books, and they expect another good year.
"This will either be our most profitable or our second-most profitable year in the company's history," Joel Rassman, chief financial officer of Horsham, Penn.-based Toll Brothers, told investors this week. Its profits rose about 50 percent in 2004 and nearly doubled last year.
Investors, however, have been bidding down the stocks of home builders since July, prompting executives to complain that their companies are undervalued despite record earnings. The nine largest publicly traded builders have seen their shares fall 14 to 44 percent since their peaks, with Toll Brothers and Hovnanian the biggest losers.
Alex Barron, an analyst in San Francisco for JMP Securities, said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last.
"Investors kept saying, 'Next year housing will go down,'" Barron said. "I guess they're finally right."
I think you are looking for kvrdave's son's middle name thread.
:clap:
Yeah, slowing some but land is still the smartest investment out there to me. There are only going to be more people, not less, and an increasing need for space.
The Bus
04-18-06, 05:55 PM
New Housing Starts: -7.8%
Building Permits: -5.5%,
The Bus
04-18-06, 05:58 PM
She said they range in price from $700,000 to $800,000. I almost choked when she said that. Than when she said that they come with Kohler stuff, and overmount sink and carpeting I almost broke out laughing. You have to be crazy to pay this kind of money for junk you can get from Home Depot. I can buy a $380,000 house built 50 years ago a few miles away in the same school district and spend $300,000 on top of the line stuff to make it better and my way.
You're paying for the Dix Hills address, not the stuff in the house.
X
04-18-06, 06:01 PM
New Housing Starts: -7.8%
Building Permits: -5.5%,Existing houses seem to still be doing fairly well. But new construction was pretty crazy the last couple of years.
Nick Danger
04-18-06, 06:37 PM
Has anyone seen information on housing construction that excludes the hurricane areas? One would think that Rita and Katrina skewed the overall trend.
al_bundy
04-18-06, 09:53 PM
didn't see today's posts, i thought this thread has been dead for a while and was going to bump it.
Latest stuff I'm reading
Florida is crazy. Just check realtor.com. Inventory quadrupled over last year and there are tens of thousands of new condos coming onto the market in the next year or so. Reminds me of NYC 20 years ago.
Inventory is up in many other markets.
I'm seeing a few posts on other websites of people having trouble selling their homes, can't refi due to equity loss and wanting to refi because they can't pay 10% on their HELOC.
$300 billion in ARM's are due for readjustment this year and $1.5 Trillion next year.
LIBOR is up to 5%. If you have a $400,000 mortgage that is going to adjust from a low teaser rate you are in for one hell of a payment shock.
Asian investors have been pulling money out of US fixed income investments which will further raise rates.
And www.condoflip.com is not going live
al_bundy
04-18-06, 09:56 PM
Has anyone seen information on housing construction that excludes the hurricane areas? One would think that Rita and Katrina skewed the overall trend.
Well. I finally got in the market, and have my first house coming soon Closing is the last day of the month. We didnt' end up where we were ideally wanting to live, but decided for the difference in house it made the most sense. We can get a house that's pretty much move in ready for the price of one that needs a rehab of multiple rooms for the same cost. I see the upside around the same based upon location etc. I will be living in Framingham, MA instead of WestWood.
I think I did pretty good price-wise, I purchased this house for what the house across the street sold for, 2 years ago. So, it seems the value stayed pretty flat at least between the two houses, because they're similiar if anything the one I'm getting is bigger, better etc.
X
06-07-06, 11:14 AM
Congratulations! Now you'll start wishing for prices to really appreciate again.
They're still going strong around here. But I've been reading that the over $5 million market is getting softer.
The Bus
06-07-06, 03:38 PM
Congratulations! Now you'll start wishing for prices to really appreciate again.
They're still going strong around here. But I've been reading that the over $5 million market is getting softer.
The job market is the main driver for most places. CA is obviously a whole different animal. The $1MM+ market around here (your $4MM+ market) has been pretty cold around here, as well as in the resort areas downstate.
Average US home prices increased by +12.5% for the 1-year ending 3/31/06, nearly 4 times the rate of inflation (+3.4%) our nation experienced over the same 1-year period (source: Office of Federal Housing, Department of Labor).
Note this is for the 1-year period following this thread and for the three-year period following the FatWallet thread. :lol:
That said, I held off on investing in real estate in Las Vegas because a great return was tied only to significant appreciation We'll see how smart my decision was in the next few years.
ukywyldcat
06-07-06, 06:45 PM
I think I did pretty good price-wise, I purchased this house for what the house across the street sold for, 2 years ago. So, it seems the value stayed pretty flat at least between the two houses, because they're similiar if anything the one I'm getting is bigger, better etc.
How much higher is your interest rate now than it would have been 2 years ago? This is pure speculation, but I doubt your deal this year is much better (if it is better at all) than it would have been 2 years ago.
Congrats, however, on taking the plunge. No matter what anyone might be saying right now, real estate is the best investment out there.
The Bus
06-07-06, 07:21 PM
How much higher is your interest rate now than it would have been 2 years ago? This is pure speculation, but I doubt your deal this year is much better (if it is better at all) than it would have been 2 years ago.
Congrats, however, on taking the plunge. No matter what anyone might be saying right now, real estate is the best investment out there.
His rate, assuming everything else was the same (credit, $ down, etc) is probably anywhere from 0.5% to 1.5% higher now, so about $80 more per $100,000.
The Bus
07-25-06, 12:40 PM
This morning, Existing Home Sales hit the wires, showing stronger than expected sales of 6.62M, over the 6.60M anticipated. However, an important note in the report showed a moderately slower pace of inventory turnover, moving up slightly to 6.8 months. This is the highest level since 1997, and backs up Bernanke's statement that the housing market is slowing, but in an "orderly" fashion, and moderating to more normal historical levels.
So it looks like we certainly did hit the "peak" a while ago, but this is a peak of increases, not a peak of value. "Moderating to historical levels" probably means a 4-6% yearly increase.
LurkerDan
07-25-06, 12:48 PM
my home purchased 13 months ago has increased some $50k in value according to zillow.com (not that I really buy their "estimate"). That's well over 10%. SWEET! Love this real estate bubble!
al_bundy
07-25-06, 12:50 PM
i'm not following the bubble news too much until early 2007 when the ARM's really start to reset
consumer spending is not rising too much and this has the stock market spooked. i'm even hearing bubble talk now on cnbc. and i keep reading bad stories about the phoenix area as well as some negative sentiment on http://sdcia.com
X
07-25-06, 01:29 PM
It's still pretty strong around here. 3% decline in sales over the last couple of months but the median home price has gone up 8% in the same timeframe.
While certain areas are going to take a predictable hit, it certainly appears to be a soft landing overall.
The Bus
07-25-06, 02:06 PM
It's still pretty strong around here. 3% decline in sales over the last couple of months but the median home price has gone up 8% in the same timeframe.
While certain areas are going to take a predictable hit, it certainly appears to be a soft landing overall.
If you take a look at the historical price of homes vs. inflation, for a long time, our homes were "under" valued compared to other goods. In the past couple of years, we've caught up to that. This is from a full-sized poster with data I saw, so I don't have a link but it was reputable.
I don't buy that as 100% of the data needed to determine anything, but I thought it was interesting. More than anything, I hope inflation is kept in check and we see an increase in wages. ECI report comes out Friday, so let's see what it will say.
4KRG
07-25-06, 06:55 PM
:lol: just sitting here watching ABC news, they claim that the housing bubble has burst and has had 10 concecutive months of slow downs.
This is in the washinton DC area (not just within city limits, but the entire area).
They are continuing to list out how all the builders are offering unbeleivable incentives to buyers.
Then they went on to say other areas like in AZ and FL are burst as well.
The term "buyers market" was used for 12 major cities around the US (cities not listed)
Also to note, the forclosure rate is 17% higher for June 2006 than it was for June 2005
I would say that I personally would not want to be trying to sell a home right this minute. I have also noticed that in the DC area, 1 million dollar homes seem to be hit the hardest. The $500k homes (condos really) and the 5 million + market seem to be just fine, it is the 1 million to 1.5 million that are being hit the hardest. In this area that is mostly the typical 3000 square foot single family home with a 2 car garage and a basement.
Selling a new home is getting harder and harder: just ask the builders who are being forced these days to entice potential buyers with expensive inducements like free swimming pools and fancy kitchen cabinets.
A homeowner in Chappaqua, N.Y., is trying to sell his property just as the national market for homes is starting to favor buyers. Sales for existing homes fell in June for the third consecutive month.
At the same time, the torrid pace in the existing-home market is slackening, as prices are leveling off and properties are staying on the market a lot longer than they used to.
Adding it all together, a variety of experts now say, the housing industry appears to be moving from a boom to something that is starting to look a lot like a bust.
“Housing has had a great five-year run,” said Edward Yardeni, chief investment strategist for Oak Associates, a money management firm in Akron, Ohio, and a longtime bull on the economy. While he still does not expect a housing downturn to damage the overall economy severely, he predicts that the housing industry itself is entering a longer decline.
“Instead of being a seller’s market,” he said, “it became a buyer’s market. And once the psychology changes, it could take a while to reverse. Buyers recognize there’s no need to rush out to buy a home.”
The latest housing data, released yesterday by the National Association of Realtors, made clear that a significant slowdown is under way. It showed that the sales pace for existing homes fell for a third straight month in June — the ninth monthly decline since hitting a record last June.
On a seasonally adjusted annual basis, the rate of existing-home sales dropped to 6.6 million, down from 6.7 million in May and well below the record 7.3 million pace reported last June. The number of existing homes still on the market, meanwhile, grew to a record of 3.725 million units, representing a 6.8-month supply at the June selling pace, up from 6.4 months in May.
The shift of the upper hand from seller to buyer is showing up in home prices. Last month, the national median price rose to $231,000, less than 1 percent higher than in June 2005. That was the smallest year-over-year increase in more than 11 years.
Builders are losing their grasp on the new-home market, which is why so many of them have responded by being more aggressive in their use of promotions to sell homes. A check by the National Association of Home Builders of 369 builders across the country found that 75 percent are currently including add-ons like pools or garages at no additional cost when they sell a home. That compares with 50 percent a year ago.
A handful of builders reported offering free vacations. None did last July.
Builders are also helping buyers finance their homes. The survey found that 33 percent of builders are currently absorbing financing points on mortgages, which allows homeowners to pay lower monthly rates. Only 18 percent reported doing so a year ago.
When people were lining up to buy, “the only thing they had to complain about last year was getting enough material, labor and land,” said Michael Carliner, an economist with the home builders association. But now, he added, “things are slowing down.”
The home builders association reported last week that builder confidence had fallen to its lowest level in 14 years.
Mike Wainwright, a realtor with Coldwell Banker Residential Brokerage in Mesa, Ariz., says that each time he walks into the sales office of a new housing development, the incentives seem to change.
“It varies from week to week,” he said. “Sometimes it’ll be a pool or $25,000 or even more than $50,000.” He said he has seen cars, kitchen cabinets and flooring thrown in free. Regionally, the slowdown in sales of existing homes last month was most pronounced in the South. The Northeast also fell, while sales in the Midwest and the West held steady compared with May.
One consequence of the slowing housing market, economists and real estate experts said, is a strengthening of the rental property market. With interest rates rising, buying a home is becoming less affordable to more and more Americans. That gives landlords improved pricing power that home sellers now lack.
“A lot of the people that wanted to make a jump to their own home are waiting,” Mark Obrinsky, chief economist for the National Multi Housing Council, a trade group for the apartment rental business. “This year is going to be a much better year than we’ve seen for quite a few years.”
The housing council is predicting the biggest net increase in apartment rentals this year since 2000, Mr. Obrinsky said.
With a growing number of potential buyers moving into rental units or holding onto the homes they own, builders across the country are canceling or delaying housing developments. From Las Vegas to Dallas to Washington, some developers now report abandoning condo projects because sales are not meeting expectations.
Earlier this month, D. R. Horton, the nation’s largest home builder, said it would build fewer homes this year than it initially predicted. It also sharply cut its earnings guidance for the year by 30 percent, citing growing inventories of unsold homes and the increased use of incentives as part of the reason.
And Kenneth Simonson, chief economist with the Associated General Contractors of America, said he thought more projects would be canceled as demand falls.
“Certainly more projects will be scrubbed,” he said. “The risk is too great that they’re going to wind up paying more for the project and collecting less.”
Mr. Yardeni of Oak Associates added: “Home builders will tell you it feels like a recession.”
See also NATIONAL ASSOCIATION OF REALTORS® Existing Home Sales Report (http://www.realtor.org/Research.nsf/files/REL0606EHS.pdf/$FILE/REL0606EHS.pdf)
<hr>
I hope potential buyers see this as what it should be: a great time to buy, especially if you've been on the fence. If you're in a market that hasn't been ridiculously overheated recently, this next year should be a break, especially if you're buying from a builder.
That NAR Report is pretty interesting. Median home price out West peaked in Nov. 05.
LurkerDan
07-26-06, 07:02 PM
slowdown and buyers market is nowhere near the same thing as a bubble bursting...
Cardiff Giant
07-26-06, 07:24 PM
just wanted to chime in and say that a few months ago there were maybe a dozen places in my price range, now there are probably double to triple that and my price range seems to be getting alot more for the money. My local news said something about home prices having dropped 16% here since this time last year.
The Bus
07-26-06, 07:28 PM
My local news said something about home prices having dropped 16% here since this time last year.
Boston?
Ginwen
07-26-06, 08:47 PM
As far as I can tell, my house has gone up about 20% in the year since this thread was started.
kvrdave
07-26-06, 09:02 PM
When the market is hot I make a killing. Then the market tanks, homes are repossessed, and I make a killing. It's those in between markets that suck.
johnglass
08-10-06, 11:36 AM
Builder: Oversupply slump worst in 40 years
Toll Brothers slashes outlook on new homes as orders plunge and revenue misses forecasts.
Link (http://money.cnn.com/2006/08/09/news/companies/toll_brothers/index.htm?pop)
NEW YORK (CNNMoney.com) -- Homebuilder Toll Brothers said the current slump in residential construction is unlike any it has seen in 40 years as it became the latest to warn of a glut in new homes for sale and a slowdown in the closely watched real estate market.
The builder of luxury homes also reported weaker than expected preliminary results for the just completed quarter and cut its outlook for the homes it will sell in the current period. Toll Brothers (Charts) shares fell 4 percent in premarket trading.
The housing and homebuilding markets have helped drive the national economy during the past few years. Any downturns in these critical sectors could add to the problems of an already unsteady situation.
In a statement, company chairman Robert Toll warned there is a glut of supply of homes for sale in the market, as the building boom of recent years seems to be turning into a bust.
The slowdown "is the first downturn in the forty years since we entered the business that was not precipitated by high interest rates, a weak economy, job losses or other macroeconomic factors," Toll said in his statement.
"Instead, it seems to be the result of an oversupply of inventory and a decline in confidence," he added. "Speculative buyers who spurred demand in 2004 and 2005 are now sellers; builders that built speculative homes must now move their specs; and nervous buyers are canceling contracts for homes already under construction."
Markets where the company recorded big increases in cancellation rates included Orlando, Northern California, Palm Springs, Las Vegas and Phoenix.
The company's reported homebuilding revenues were approximately $1.53 billion in the quarter ending July 31, compared to the record of $1.54 billion a year earlier. Analysts surveyed by earnings tracker First Call had been forecasting a 7 percent increase in overall revenue at the company.
The Pennsylvania-based builder said it expects to deliver 2,500 to 2,800 homes in the current quarter, a cut of at least 14 percent from its previous guidance of 2,900 to 3,300. And the company announced signed contracts in the just completed quarter plunged 45 percent to $1.05 billion from a record of $1.92 billion a year earlier.
The company said it is not under as much pressure as many builders to cut prices because it builds relatively few homes on spec. But Toll said that much of the supply of finished and near-finished product is being marketed using advertised price reductions and increased sales incentives, which in turn is leading many potential buyers to delay their purchase decisions as they wonder about the direction of home prices.
But Toll said the company believes that, as there is a cutback in supply by builders, the housing market should be able get back on the growth track of recent years.
"With many potential buyers on the sidelines right now, we believe there is growing pent-up demand that will come into the market once buyer sentiment improves."
Toll said on a conference call Wednesday afternoon that he expects the slump to last at least through the end of the year, however, adding it could drag on for another two.
"But the market isn't dead," Toll said. "It's concerned with the direction of home prices and if it has reached the bottom. You might argue that this is the best time to buy a home, with comparatively low mortgage rates and incentives. It's very hard to pick a bottom and anyone who tries will probably have a problem."
Toll named some once previously hot markets as underperformers lately.
Florida has been fair or poor, for the most part, not an unexpected assessment during the summertime. Other down markets were Las Vegas and Reno, Chicago, Minnesota and the Maryland shore.
Stronger markets he named were Hoboken, Delaware, Colorado and Phoenix.
Sonicflood
08-10-06, 11:49 AM
When the market is hot I make a killing. Then the market tanks, homes are repossessed, and I make a killing. It's those in between markets that suck.
Same here. REO* properties are starting to heat up in my area!
* Real Estate Owned - Properties that go back to the mortgage company/bank after an unsuccessful foreclosure auction. The properties may be listed/sold through a registerd real estate agent/agency.
LurkerDan
08-10-06, 12:47 PM
Stronger markets he named were Hoboken, Delaware, Colorado and Phoenix.
:banana:
al_bundy
08-10-06, 01:04 PM
just came back from Larimer County in Colorado, 30 minutes form LurkerDan and the wife and I took a trip to see Toll's new development at the Broadlands in Broomfield.
Very nice homes. Best floorplans I have seen so far. Average price before upgrades is around $150 per square foot. My in-laws 50 year old attached home in Brooklyn NYC is around $300 per square foot to compare. And since they are charging lot premiums and no begging for sales I got the impression that things were going pretty good in the area. Same with other builders I looked at in the area. Strange thing is that they had a subdivision there with $800,000 custom homes and every other home was for sale. Not so with the cheaper homes.
Wife and I are thinking of moving to Northern Colorado in a few years and there is crazy building going on everywhere except for Boulder.
The Bus
08-15-06, 01:04 PM
It's a bit confusing just skimming these reports because the market is still appreciating. It's just not red-hot. I'm pretty sure Cardiff Giant's news (who reported a 16% decline in home prices) was wrong because even badly overpriced specialty markets (Florida condos) only dropped 11%. Now, this is all year-on-year so it's a lagging indicator. It could be prices are dropping more drastically but because of the year average, it doesn't seem to be as much.
http://i.today.reuters.com/images/logo.gif
U.S. Home Prices Flatten in Most Metro Areas
by David Lawder
WASHINGTON, Aug 15 (Reuters) - Home price gains slowed dramatically in most U.S. metropolitan areas in the second quarter, but Baton Rouge, Louisiana, several Florida cities and parts of the Pacific Northwest bucked the trend with double-digit gains, a trade group said on Tuesday.
The National Association of Realtors said that of 151 metropolitan areas, 37 had double-digit year-on-year price increases for existing single-family homes in the April-June period, while 26 saw prices decline. Home price appreciation was in the single-digit range for the vast majority of areas.
The national median existing single-family home price was $227,500 in the second quarter, up 3.7 percent from $219,400 a year earlier. The median is a typical market price where half of the homes sell for more and half for less.
Gainers
Baton Rouge, La.: 27.3% increase to $172,300.
Ocala, Fla: 25.3% increase to $169,500.
Virginia Beach-Norfolk-Newport News, Va.: 23.6% increase to $237,300.
Portland, Or.: Fifth largest price gain, up 19.1 percent to $283,400.
Losers
Danville, Ill.: Had had the lowest U.S. median price of $65,200, also had the biggest year-on-year price drop, down 11.2 percent.
Detroit-Warren-Livonia, Mi.: Prices fell 8.0% to $155,700.
Rockford, Ill.: median price fell 5.5 percent to $115,900.
Most Expensive
San Francisco-Oakland, Ca.: The median single-family home price of $751,900 was up 3.4 percent from a year earlier.
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/FaceItTheHousingBustIsHere.aspxYou're never going to be able to help people like that Detroit accountant moran. A negative amortization adjustable loan that after two years still has a prepayment penalty? -ohbfrank-
Generally there's no reason why people can't refinance to a fixed interest-only loan with a 5 or 10 year interest-only period. That will greatly help their monthly payments. The interest rate for those in this area several years ago was around 5.25%, now it's around 6.25%, not a real big deal -- unless you bit at a variable teaser rate which was the most you could afford and expected interest rates to stay at 2 or 3% forever. The impact of those bozos' decisions will be more homes on the market and the number of them, along with the price ranges of those homes, will determine how large their impact will be on the market.
Interest rates have fallen over the last 4 weeks too and I expect them to continue to decrease.
The Bus
08-21-06, 03:49 PM
Of course, those folks who didn't learn anything from the equity mania, and who will turn out to have gotten themselves trapped in the housing mania, really have only themselves to blame.
I 100% agree. I personally feel bad for anyone that's gotten snookered into an option arm. There's a fly-by-night mortgage broker around here that advertises only those and outright lies to the people getting the mortgage (according to a real estate attorney).
The thing is, "Option" or "Flex" ARMs aren't bad. They're just a niche product that many banks are trying to fit people into. I'd be willing to say that 95% of people currently with Option ARMs either did not have the mortgage properly explained to them or were consciously fit into a poorly thought out financial plan. The accountant must've been sleeping. Option ARMs are terrible for markets like Detroit where the market's been cold for years.
I guess it's also a bit too much to ask for people to compare rents and mortgages. When I bought this place, my mortgage was at rent level or lower. It would've been more expensive to rent. The other day I saw a property for sale down in the resort/beach area downstate: About $1,000,000 for the list price, and the ad bragged it brought in $30,000 of rental income per year.
That means if you put $600,000 down and rented that property, your monthly payments still wouldn't break even. Now, I don't think the property is 100% overpriced, but only an idiot would take those figures and think they were a good deal.
Also, I still think the phrase "the housing bubble has burst" indicates some sort of deflation in prices. Apart from some local areas, I think prices in a year will be higher than today's prices, and today's prices (for the most part) are higher than the prices a year ago. But, "housing bubble pops" sells more magazines, I guess.
al_bundy
08-21-06, 03:57 PM
Lennar is offering 3.99% on a bunch of developments in the DC area
too bad for all the people trying to sell their old junk in the area
al_bundy
08-21-06, 04:01 PM
You're never going to be able to help people like that Detroit accountant moran. A negative amortization adjustable loan that after two years still has a prepayment penalty? -ohbfrank-
Generally there's no reason why people can't refinance to a fixed interest-only loan with a 5 or 10 year interest-only period. That will greatly help their monthly payments. The interest rate for those in this area several years ago was around 5.25%, now it's around 6.25%, not a real big deal -- unless you bit at a variable teaser rate which was the most you could afford and expected interest rates to stay at 2 or 3% forever. The impact of those bozos' decisions will be more homes on the market and the number of them, along with the price ranges of those homes, will determine how large their impact will be on the market.
Interest rates have fallen over the last 4 weeks too and I expect them to continue to decrease.
the latest numbers i heard were close to 30% of all mortgages being some type of ARM right now in the US. For every point the rate rises that's almost $100 more per month in the payment per $100,000 borrowed.
Then you have all the geniuses that decided they were going to flip 3 or more houses or live in a home and when the rate rises, sell.
Looking at the inventory numbers in Arizona, DC, Florida and one or two other markets there were a lot of stupid people there and most of the ARM resets don't begin until next year.
And lately I've been reading stories of people who can't refi due to the home not being appraised for what they need to get a loan.
Bushdog
08-21-06, 04:40 PM
I love all these people with ARMS getting fucked now. Many of them and their creative financing are responsible for changing the nature of the market by being greedy and buying more house they could afford, which just accelerated housing prices forcing other people to take out ARMS just to get a decent house.
BadlyDrawnBoy
08-21-06, 04:41 PM
my partner is selling his 1/2 of the 2 unit TIC We have in a month or so.
we've had it since Jan 4 2005, we paid 1.1M for the building, he's listing his at 900K.
al_bundy
08-21-06, 04:53 PM
listing and selling are two different things
there is a lot of stuff in NJ being sold at 20% off the original asking price
BadlyDrawnBoy
08-21-06, 04:58 PM
yeah that doesn't happen in the bay area yet. what is happening is that places are being listed right around the value, versus the previous option of underlisting to get in multiple offers.
X
08-21-06, 05:12 PM
the latest numbers i heard were close to 30% of all mortgages being some type of ARM right now in the US. For every point the rate rises that's almost $100 more per month in the payment per $100,000 borrowed.
Then you have all the geniuses that decided they were going to flip 3 or more houses or live in a home and when the rate rises, sell.
Looking at the inventory numbers in Arizona, DC, Florida and one or two other markets there were a lot of stupid people there and most of the ARM resets don't begin until next year.
And lately I've been reading stories of people who can't refi due to the home not being appraised for what they need to get a loan.Some type of ARM doesn't mean they're screwed like that moran with negative amortization and a pre-payment penalty.
I doubt the number of "people who can't refi due to the home not being appraised for what they need to get a loan" is large enough to have a big impact on the overall market.
The Bus
08-21-06, 05:35 PM
According to LoanPerformance/WSJ, Interest Only mortgages make up 22% of all mortgages today. Obviously, the % of new mortgages the past few years which were interest only were much higher.
al_bundy
08-21-06, 05:55 PM
According to LoanPerformance/WSJ, Interest Only mortgages make up 22% of all mortgages today. Obviously, the % of new mortgages the past few years which were interest only were much higher.
the figures from california were 75% some type of ARM in 2005 and 50% for the first few months of this year
Lateralus
08-22-06, 07:25 PM
Interesting charts for the 10 biggest home builders in the US:
Those charts do appear to be saying 'bubble burst', but maybe the big down swing means something else? ;)
X
08-22-06, 11:20 PM
Those charts do appear to be saying 'bubble burst', but maybe the big down swing means something else? ;)Those stocks are simply back at where they were a year ago. It shows a deceleration in demand for newly constructed houses. It does not show what is commonly thought of as a "bubble burst", such as what occurred with internet stocks in 2000.
If the value of houses went back to where they were a year ago that would be a relatively soft landing. If they go back to where they were 5 years ago that would be more like a bubble burst.
gev115
08-23-06, 08:28 PM
Ok, I've read through a lot of this thread, but I am pretty new at this stuff. I am just out of college and about to start work. I am back home in the Bay Area and have been looking for an apartment in San Francisco. Now my parents have offered to loan me the money for a down payment if I wanted to buy a one bedroom flat in the city. They aren't seasoned real estate invetsors either, but have talked to some friends in the business.
Is now a good time to do this? Or would a year down the line make more sense if the market softens? If done, I plan to stay for a decent length of time. In the end, I'll only be paying a little more in payments as I would in rent, but be gaining the equity. If the means are there to do this, is there any reason I shouldn't? Thoughts?
al_bundy
08-23-06, 08:41 PM
i usually say buy anytime you can afford, but there is no way in hell i would buy anything in california for a few years. i hear rents are something like 1/3 the house payment
X
08-23-06, 08:58 PM
Ok, I've read through a lot of this thread, but I am pretty new at this stuff. I am just out of college and about to start work. I am back home in the Bay Area and have been looking for an apartment in San Francisco. Now my parents have offered to loan me the money for a down payment if I wanted to buy a one bedroom flat in the city. They aren't seasoned real estate invetsors either, but have talked to some friends in the business.
Is now a good time to do this? Or would a year down the line make more sense if the market softens? If done, I plan to stay for a decent length of time. In the end, I'll only be paying a little more in payments as I would in rent, but be gaining the equity. If the means are there to do this, is there any reason I shouldn't? Thoughts?Unless I really had to buy something now I would watch for signs of the market softening in the coming months. You would be in a better position to negotiate.
The best thing to do now might be to compare rents with what mortgage payments would be. You should also add to the payments what interest on the down payment would be to get a truer picture of their real cost. And of course, the tax benefits need to be considered but maybe when you're just starting out in work they wouldn't be that substantial.
If renting is less expensive it probably wouldn't hurt to hang out for a while to see what happens. I have a hard time seeing SF going crazy with appreciation in the immediate future.
However one thing that makes SF and its immediate areas different than most anywhere else is that there's no more land to build on. The East Bay is fairly soft right now but that's because there are a ton of new homes being built way out from SF. I think gas prices are going to contribute to their problems and make the immediate SF area even more desirable. But there's a lot of recent appreciation to be digested first in my opinion.
The Bus
08-23-06, 10:32 PM
I don't know about your local area, but I would say if you're going to be "settling down" there (5-10 years), start hunting now for a really good deal. It may be a foreclosure or something but find an agent that is willing to work with you to find something that's below market or where you can put some pressure on the seller. That'd be my advice.
One Orlando-based couple thought they were in a bubble. Are they in a bust?
By Les Christie
CNNMoney.com
When Casey Young and his wife Jaime Ballanco put their Orlando house on the market back in March, they had no clue that the property would not sell. As far as they were concerned, Orlando was still bubbling.
"It was a foregone conclusion that we would sell it very quickly," says Young. "There were still bidding wars going on around Orlando."
After all, home prices were supposedly growing in the neighborhood of 20 percent a year. But what the top-line statistics masked was that a slowdown was already underway - from the fourth quarter of 2005 to the first quarter of 2006, the median home price in Orlando fell 0.5 percent.
Young and Ballanco have a particularly vexing problem having just contracted to buy a new house.
"We're planning on starting a family someday," says the 30-year-old Young, who builds simulation software for a defense contractor. "We wanted a bigger home - with a pool."
The new house cost $562,000 so they were really counting on profits from the old place to help. They had bought their current four bedroom, two-and-a-half bath, 2,861 square foot contemporary new on the last day of 2002, paying $167,000.
Young had spent a lot of money and sweat improving the place over the years, putting in tile floors, chair rails, crown moldings and other amenities. The house has formal living and dining rooms and Young also installed a lovely Koi pond in the backyard with a rustic Japanese bridge.
Believing that the house would sell itself, Young decided to list it through Flat Rate Realty, a for-sale-by-owner operation that will place a property on the multiple listing service for a fee of $99.
Home values in Orlando had nearly doubled in the years he owned the house, according to statistics from the Office of Federal Housing Enterprise Oversight, and with all the improvements he made he felt it was well-priced at $402,000.
"My house is priced very low compared to other comparables in the area," says Young.
But the only calls he was getting were from realtors, who wanted to act as his agent.
No action
After weeks of no action, he hired one of the agents - The John Muccigrosso Team - which had a reputation as a very active seller and had done well in down markets, according to Young.
They re-priced the house, lowering it to $369,000 and then to $349,000. They've had open houses that nobody attended; run advertisements that elicited no responses; and sent out flyers that were totally ignored.
In all its months on the market, the house has drawn only two lookers.
"One sounded like he was just doing research. He may not have been a legitimate buyer," says Young. And the other couple just walked away.
The biggest issue may be a glut of listings. "Lots of investors swooped in buying homes when the market was hot. Now they are dumping them. My agent tells me that's where the glut comes from."
The number of homes on the market in Orange and Seminole Counties has skyrocketed, from 4,473 in July 2005 to 19,827 in July 2006, according to raw data drawn from Mid-Florida Regional Multiple Listing Service Hotsheet reports.
To know the problem is no consolation to the couple, who are increasingly feeling the stress. They have to make a decision soon about whether to go ahead with the purchase and hope they'll sell the old house, or give up the new place and lose their $28,000 deposit.
They're due to close Oct. 24.
"I absolutely need the profit from my old home to afford the new one," says Young. "Even with rental income from one of the homes, there's no way I can afford both mortgages at the same time.
I can't help thinking but how can people be so stupid to expect a 100% increase in the value of their house in 4 years?
al_bundy
09-26-06, 11:10 AM
i've read stories like this and I think you have to be smoking some crazy drugs to put $30,000 on a new home without selling the current home or being in contract
The Bus
09-26-06, 11:38 AM
Real Estate 101: In a down market, sell your home first before buying a new one.
Deftones
09-26-06, 12:06 PM
This exact thing happened to my friends. They just bought a huge house about 6 months ago, a big upgrade (price and size-wise) from their last house. The old house has been on the market, with nary a nibble of interest. In one of the best neighborhoods in the valley due to the school district it is in. He's losing his shirt over it right now.
fuzzbox
09-26-06, 12:12 PM
My mom sells real estate in Orlando. She says the market there is miserable now. Open houses that get no attendance at all to houses that stay on the market for months with no interest in them.
Now, 2 years ago she was telling me how crazy the market was there. Houses that were sold before they were built, housing developers having people lining up at 3am to put BIDS on houses in developments, developers seling only 3-5 units at a time in 50+ developments, because that way they could gauge how much they could wring out of people for the other ones...
Just goes to show you- if you want to look for the next depressed housing market, look for the one that's booming right now.
Now if only the same thing happened in the Boston area, maybe I could actually afford to buy instead of rent...
-jason
al_bundy
09-26-06, 12:53 PM
Came out yesterday that we finally have a median price YoY decline in the US over the last year. First time in 11 years.
and i just read a blurb that Palm Beach County of 2000 fame is now at 35 months inventory at current sales rates. maybe if they do a recount it will come out better?
Parts of california are approaching the magical 9 month inventory mark and a few other places around the US are over the 1 year mark now.
DVD Josh
09-26-06, 03:58 PM
Couple all this with the inevitable fall of interest rates and you have a solid buyer's market.
kvrdave
09-26-06, 04:11 PM
I tend to think a rise in interest rates gives you a better buyer's market than lower interest rates. Cheaper money brings out more buyers and investors.
But it could go solid buyer's for a bit, to be sure.
JimRochester
09-26-06, 10:23 PM
I can't help thinking but how can people be so stupid to expect a 100% increase in the value of their house in 4 years?
They did make an assumption that didn't pan out, but that type of appreciation was not unheard of. My buddy is a realtor in Orlando and he told me of those types of windfalls and bidding wars. Business was actually bad for him because people were selling and buying without a realtor. Houses would literally sell within hours of going on the market for ridiculous prices.
al_bundy
09-26-06, 10:24 PM
but it got so bad that people began to expect these kinds of gains in some markets
X
10-18-06, 02:53 PM
Interesting numbers about Northern California just came out.
It appears my theory about distance from work being a major factor in holding up the value of a home is confirmed so far. Particularly with relatively high gas prices.
The closest areas to most people's work are San Francisco and Santa Clara. Then prices have declined a little almost directly related to how far the area is from those major employment areas.
News on Housing - new home construction unexpectedly jumped 5.9% higher in September to a seasonally adjusted annual rate of 1.772 million new homes, which was hotter than 1.650 million. Surprisingly, this is the first increase in housing starts since last May and the highest level since June. However, Building Permits fell 6.3% to a five-year low of 1.619 million, which was less than expectations of 1.715 million.
Lateralus
10-18-06, 04:29 PM
News on Housing - new home construction unexpectedly jumped 5.9% higher in September to a seasonally adjusted annual rate of 1.772 million new homes, which was hotter than 1.650 million. Surprisingly, this is the first increase in housing starts since last May and the highest level since June. However, Building Permits fell 6.3% to a five-year low of 1.619 million, which was less than expectations of 1.715 million.
I can see that around here, new homes are more affordable than older homes. The home builders know how much they can get for a house while the current home owners still want to get the same prices they were getting a year ago.
DVD Josh
10-18-06, 04:35 PM
I can see that around here, new homes are more affordable than older homes. The home builders know how much they can get for a house while the current home owners still want to get the same prices they were getting a year ago.
I couldn't agree more with this. I can't believe the people that just refuse to accept that their home won't sell for what it's "worth". I think way too many people bought high with stupid ARMs and IOs and now can't pull the trigger, even though its costing them much more to stay.
They'll crack.
X
10-18-06, 04:51 PM
The thing is, when refinancing comes around, rates haven't gone up all that much. An interest-only loan may go from 5.25%, where it was 4-5 years ago, to about 6% now.
So, unless they can't get financing due to being upside-down, I don't think that many people are going to have to dump their houses.
al_bundy
10-18-06, 04:54 PM
still waiting for next year's ARM reset and I still think the biggest issue is affordability when people's rates go up. LIBOR is around 5% now so the new rates should be around 7%
One thing paying 3% on a $300,000 mortgage, but if the payment doubles it may be a problem
one thing i got right, the market did peak around summer of last year right about when the homebuilders' stocks peaked
Thor Simpson
10-18-06, 05:00 PM
Um... how much would interest rates have to climb for a mortgage payment to literally double? Figure someone got in at 5% which is a little more reasonable.
My calculations say 14% interest would do it on a $300,000 loan. We're not there.
X
10-18-06, 05:05 PM
One thing paying 3% on a $300,000 mortgage, but if the payment doubles it may be a problemPeople shouldn't be paying 3%. That means they're already doing negative amortization.
al_bundy
10-18-06, 05:08 PM
few years ago when rates were at their lowest you could get an ARM for like 2% without negative ammortization
2-5 year teaser rates and 2007 and 2008 $2 trillion worth of ARM's will reset to LIBOR plus a premium of 2% or so. 2006 was around $400 billion of ARM's and 2009 is around another $450 billion from the last numbers i saw
if you search Fatwallet finance threads back in 2003 and 2004 it seems every other person had a bright idea to buy an expensive home on an ARM because they knew their income was going to increase or they would sell before they move or some other reason
$300,000 loan is $1265 for P&I at 3%
at 7% it's $1996
50% jump in people's largest expense is a big deal especially when you factor in increases in property taxes and other expenses over the last few years. NYC area property taxes are up 20% to 30% over 2003.
X
10-18-06, 05:10 PM
If that's so, the buyer should have accounted for rates rising to what were even current at that time market levels. And they haven't gone up that much. Maybe a point.
4KRG
10-18-06, 05:13 PM
I have to agree with Al
Thor the 3% rate was given on a lot of 3 year ARMs as the introductory teaser rate to suck people in that otherwise could not afford the home.
Double the mortgage is a bit extreme, but if you are barely making your payments at 3%, then when your rate jumps to 7% you are quickly going to be foreclosed upon :)
Then add property tax increases on top of that.
I have a friend in this boat right now. He took a 4% rate for a 3 year ARM to buy into a $750k home (he put $300k down, so his loan is $450k at 4%).
This spring his ARM adjusts, how much more do you think he will owe? I will add, his loan is paperless so it is bit higher rate.
His property taxes just went up about 30%, yes 30%, and his escrow payments adjusted this month to reflect it. He said he can barley make payments as they stand.
When his ARM hits 7%, I think he is done. He has an ad in the local paper now looking for a roommate, that is the only way he can hold on. Good thing for him he put $300k down (profit from a prior home sale) as he may need to eat into it in order to get out of this house. I will also add that he is in danger of being unemployed as a contract he was working on ended.
I think many people are in his similar situation.
Since I am looking to keep my current house as a rental unit when I go to buy something else, I see some opportunities for 'forclosure' sales coming up in my area :)
I heard speculation that the bottom of housing prices will be somewhere around March of 2008, but no one knows the future. Here in DC it could be much worse if defense spending gets cut back like predicted.
Oraphus
10-18-06, 06:36 PM
His property taxes just went up about 30%, yes 30%, and his escrow payments adjusted this month to reflect it. He said he can barley make payments as they stand.
.
\
How can his prop tax go up 30% in one year?
there is a cap of like 2% a year.... or something simillar.
al_bundy
10-18-06, 07:07 PM
depends on your location
some people in nassau county where the guy got convicted for DWI are seeing their taxes go up by 20% this year alone. for the last 4 years they have increased around 10% per year
pretty sure only california and one other state has a law about tax increase limits
LurkerDan
10-18-06, 07:18 PM
but property taxes are tied to assessed value, so if values fall, taxes shouldn't go up.
It's very hard to talk about something like property taxes as an abstract matter, though, since they are EXTREMELY location dependent.
4KRG
10-18-06, 07:50 PM
How can his prop tax go up 30% in one year?
there is a cap of like 2% a year.... or something simillar.
not true in the state of VA, sorry
but property taxes are tied to assessed value, so if values fall, taxes shouldn't go up.
It's very hard to talk about something like property taxes as an abstract matter, though, since they are EXTREMELY location dependent.
Yes, they are extremely location dependent, but many people pay them and many people are screwed by the increase. My friend has to deal with outrageaous taxes as well as the ARM jump all at once.
Property taxes are tied to assed value, BUT they also have a rate usually discussed in how many dollars of tax you pay for $1000 of value.
If the county feels it needs more or less money, it can change the rate per $1000 taxed. This is completely within their control.
The problem I have right now is the assed value of my house matches the peak that happened a year or so ago. There is no way I could sell for the assed value right now. I am getting screwed.
in order to fight the assed value you have to show comparable homes in your neighborhood that sold for less than your value and argue it. Well, since prices dropped, NO ONE in my area has sold anything, so there is no lower value to go argue with yet. It really sucks.
Thor Simpson
10-18-06, 08:15 PM
We have a 5 year arm, but I believe the interest rate can only jump a certain amount every 6 months following the 5 year period. It's not like it could suddenly jump to 12% if the rates were that high.
I plan on refinancing in the next year and a half if we decide to stay in this house. I was waiting for a good 30 year fixed but is there any reason at all to do that if we know we will move within 5 years? Wouldn't another 5 year ARM be the way to go?
The Bus
10-18-06, 08:38 PM
We have a 5 year arm, but I believe the interest rate can only jump a certain amount every 6 months following the 5 year period. It's not like it could suddenly jump to 12% if the rates were that high.
I plan on refinancing in the next year and a half if we decide to stay in this house. I was waiting for a good 30 year fixed but is there any reason at all to do that if we know we will move within 5 years? Wouldn't another 5 year ARM be the way to go?
Everything you say is :up:. Email me or IM me.
Deftones
10-18-06, 09:09 PM
My house has actually dropped to the exact same level it was when I bought it this past February. Was up over $50,000, now it's down that much. :lol:
Superman07
10-18-06, 10:03 PM
Yes, in VA they love to "lower our taxes", but increase the property rates astronimically (especially outside of DC), so you see a net increase.
I don't own myself, but I'm looking to and it's very difficult given the cliamte up here. Don't fancy putting $450-500k for a new townhome if not more.
As 4KRG stated it's definitely not getting any better around these parts. And yes, expect defense spending to decrease. ;)
The Bus
10-19-06, 07:08 AM
Holy cow Deftones. That's a huge swing.
atari2600
10-19-06, 10:34 AM
My house has actually dropped to the exact same level it was when I bought it this past February. Was up over $50,000, now it's down that much. :lol:
where do you get that info? link?
4KRG
10-19-06, 10:41 AM
where do you get that info? link?
This is about the best "link" I have seen that discusses real estate values
http://www.zillow.com/
It is still NOT market value though.
Asking him for a link to the current market value of a house is not right. He can't provide it.
The best thing you could do is look for similar home sales to his in the last 90 days and work some math based on finished square feet of living space to conclude what it is really "worth" .
I will assume Def has seen other home sales in his neighborhood and came to the rough conclusion of $50k.
The Bus
10-19-06, 11:09 AM
4KRG is right. The best source of information is public records. Those are usually by county. My county's site is actually one of the best I've seen. They have ALL the information on your property: owner, address, city councilman, tax info, transfers dating back a decade plus, residential characteristics (floorplan, etc.). It's actually pretty easy to make an estimate of what your house might be worth. The only downside is it can take 30-90 days for the information to show up.
Zillow.com is pretty worthless. I've found HomeValueBot (https://www.desertschools.org/dsfcu/ds/HomeValueBot/0,1761,,00.html) to be a lot better as it uses similar automated valuation model techniques that national lenders have been using for years and years. (HomeValueBot is a service that financial institutions can plug into their website, so it's not limited to my link alone).
For my house, Zillow.com had no data and HomeValueBot gave me an extremely realistic range.
Thor Simpson
10-19-06, 11:10 AM
While it can be hard to judge "value" without seeing actual appraisals, I can say that houses comparable to those listed early this year in our neighborhood are now being listed at around 40-50K less as well and houses were selling quickly back then (within days) at the higher prices while the ones listed now for much less are sitting on the market. The house across the street has just reduced their price.
Obviously there could be a lot of other factors at play, but we've had 8 houses for sale in the past year on our street and the one next to it, so it's been an interesting sample size to watch.
I'm guessing some were overpriced above their appraised value but with the market the way it was, for some reason price seemed secondary... perhaps because people were looking at the growth that had taken place and psychologically thought that if they spent 400K on a home it would keep appreciating at similar rates. Or maybe the buyers had gotten a ton for their previous home as well.
I would doubt our own home has depreciated by anywhere near 50K since I last had it appraised (via one of those quick drive-by appraisals) last December. But I'm sure it would be less likely to appraise for the same value today given the slower market.
So Deftones, did you actually have your house appraised for 50K less than it appraised for last Feb, or how are you coming to that number? I can easily see how it could sell for that much less in the current market, but would be surprised if the "value" of it was actually that much less... if that makes any sense (since "value" might as well be what you can get for it). :lol:
Deftones
10-19-06, 11:11 AM
where do you get that info? link?
I am in a new development. They are selling my same house, new, for essentially what I paid for it back in Feb. 2006. To be fair, I actually signed the contract in March 2005. The prise rose during the last year and held steady the first few months after I got here. Then it slowly fell to where it is now.
Thor Simpson
10-19-06, 11:14 AM
For my house, Zillow.com had no data and HomeValueBot gave me an extremely realistic range.
I've decided I like Zillow more.
...Because it listed by home for about 15K more than the other. ;)
It seemed to have plenty of data for mine in a relatively new neighborhood (New development in 1994)
It does show the value of my home continuing to grow since January which is interesting. The house across the street that recently reduced it's value... well, its value also shows a decline in the same period. Very interesting.
bunkaroo
10-19-06, 11:34 AM
Has anyone had a recent experience where their house sold for close to what Zillow said is the "median"?
They seem to way overestimate the value for my area. A house down the street sold for $305K in June, and they have it at a median of $360K.
Just curious.
Thor Simpson
10-19-06, 11:38 AM
Has anyone had a recent experience where their house sold for close to what Zillow said is the "median"?
They seem to way overestimate the value for my area. A house down the street sold for $305K in June, and they have it at a median of $360K.
Just curious.
Houses at the end of our street both sold for more (maybe 10K more) than the price currently listed at Zillow. The estimate at zillow was even lower then.
Try clicking on the house you mention and see the chart of what zillow would have had it at in June.
mosquitobite
10-19-06, 11:41 AM
Has anyone had a recent experience where their house sold for close to what Zillow said is the "median"?
They seem to way overestimate the value for my area. A house down the street sold for $305K in June, and they have it at a median of $360K.
Just curious.
Zillow says my house is worth $12,500. :lol: That's about a tenth of the actual.
To be fair, it's because Indiana's tax system sucks and is nothing close to accurate or related to market value.
grrrah
10-19-06, 11:52 AM
Has anyone had a recent experience where their house sold for close to what Zillow said is the "median"?
They seem to way overestimate the value for my area. A house down the street sold for $305K in June, and they have it at a median of $360K.
Just curious.
hasnt sold yet, but my neighbor's place is listed for 2k more than what zillow says, which is about 6k more than an identical place sold for about 3 months ago. So, I would guess its slightly over, and with the market and lack of bidding wars, these places are selling for just under.
SpaceBoy
10-19-06, 12:01 PM
Zillow is pretty funny. I made a bunch of changes to the house as far as # of rooms, bathrooms etc., since the profile of the house is inaccurate, it say's the homeowner's value is 72k more then their value. Heck if it's even half of that I made like 40k since I bought in June. I doubt it though. I do bet I could sell for at least 30-40k more already from the few things we've done that haven't cost much money. The place shows nice, and we bought first opening house they had it sure didn't.
Thor Simpson
10-19-06, 12:04 PM
hasnt sold yet, but my neighbor's place is listed for 2k more than what zillow says, which is about 6k more than an identical place sold for about 3 months ago. So, I would guess its slightly over, and with the market and lack of bidding wars, these places are selling for just under.
I would say any estimate within about 10K is extremely accurate.
4KRG
10-19-06, 12:52 PM
Has anyone had a recent experience where their house sold for close to what Zillow said is the "median"?
I would doubt it because Zillow is not a market value tool, it is just a basic estimate.
Market value is far too volatile for a web site to pin it down.
I knew as soon as I posted that link there would be a hundred people stating that it has their home value wrong. :lol: No shit, it can't possible have market value correct.
atari2600
10-20-06, 02:33 AM
wow the difference in estimates on my place from zillow vs homevaluebot is HUGE. wtf?
al_bundy
10-20-06, 08:10 AM
the only valid home valuation tool is Fannie Mae's underwriting program where it allows a small percentage over the last few comps. everything else is for informational purposes only to see what the local area is like
The Bus
10-20-06, 08:13 AM
the only valid home valuation tool is Fannie Mae's underwriting program where it allows a small percentage over the last few comps. everything else is for informational purposes only to see what the local area is like
:up: This is the automated valuation model I was referring to. Even there, it's only a range. FNME and other lenders only ever use it if they are supremely confident that there's no risk. Areas where there's $50,000 houses and $150,000 houses and $500,000 houses all within a short distance may not do so well.
al_bundy
10-20-06, 08:30 AM
If that's so, the buyer should have accounted for rates rising to what were even current at that time market levels. And they haven't gone up that much. Maybe a point.
what about the genius who posted here earlier in the week or last week about how his bank didn't tell him about part of the mortgage payment or whatever? He had a GFE, all the loan docs and didn't bother to read them and relied on the loan officer to exlain everything even though it's written at an 8th grade reading level. Something came up, went back to the bank for another BS explanation that he believed not knowing if it's true or not.
I did some math and I bet I know more about his loan than he does. there are a lot of people like that out there who bought homes and don't know what kind of loans they took out.
The Bus
10-20-06, 08:31 AM
what about the genius who posted here earlier in the week
:lol:
4KRG
10-20-06, 09:36 AM
what about the genius who posted here earlier in the week or last week about how his bank didn't tell him about part of the mortgage payment or whatever?
I second the :lol:
Sadly though, I think that is most people.
My firend certainly didn't take all these things into account. He was really trying to impress his girlfriend (I know stupid) by buying a much more expensive house than what he had when he met her. The house is awesome, the girl is now gone, the payment is increasing, the value has decreased...
I think he really thought the home value would continue to increase at 30% + per year and he would just sell before him ARM adjusted and take a nice profit. It could have worked out, he just started a year too late.
ANDREMIKE
10-20-06, 09:46 AM
:up: This is the automated valuation model I was referring to. Even there, it's only a range. FNME and other lenders only ever use it if they are supremely confident that there's no risk. Areas where there's $50,000 houses and $150,000 houses and $500,000 houses all within a short distance may not do so well.
This tool doesn't work for my house since I put an addition on it. I added a bedroom, bath and larger kitchen/dining room. How do I go about finding out why my house always appraises for so low with this? I think they have the wrong description for my home.
Oraphus
10-20-06, 06:35 PM
wow, this just in! my house has 99brms and 99bthroom acc to zillow. Stupid previous owner must have changed them to 3/1 instead... bastard!
atari2600
10-20-06, 07:16 PM
have fun looking for them. smash holes in all the walls to find the secret passages and rooms.
The Bus
10-21-06, 08:17 AM
This tool doesn't work for my house since I put an addition on it. I added a bedroom, bath and larger kitchen/dining room. How do I go about finding out why my house always appraises for so low with this? I think they have the wrong description for my home.
There's a field to add any improvements you've done.
ANDREMIKE
10-24-06, 01:55 PM
I am not talking about zillow..
If your not either. then how do I get this information updated?
BadlyDrawnBoy
10-24-06, 06:05 PM
www.redfin.com is a pretty cool new search thing that so far is available in the sf bayarea and seattle.
You can quickly search for houses in areas and even filter by on the market over X days.
It also shows past sales for back to 3 years.
al_bundy
10-25-06, 06:41 AM
This tool doesn't work for my house since I put an addition on it. I added a bedroom, bath and larger kitchen/dining room. How do I go about finding out why my house always appraises for so low with this? I think they have the wrong description for my home.
you have to report the work to your county so they have the higher square footage in their database
al_bundy
10-25-06, 08:30 AM
interesting article i found a link to. notice the date, and we all know what happened next
August 29, 1990
California Sees Housing Boom Become Slump
By RICHARD W. STEVENSON, SPECIAL TO THE NEW YORK TIMES
LEAD: On front lawns in many cities along the California coast, the for-sale sign has become almost as common as the palm tree, and to some sellers seemingly as permanent. After several years of breathtaking price increases and demand so strong that houses were snapped up within hours of being listed, California's giant real estate market has slowed drastically.
On front lawns in many cities along the California coast, the for-sale sign has become almost as common as the palm tree, and to some sellers seemingly as permanent. After several years of breathtaking price increases and demand so strong that houses were snapped up within hours of being listed, California's giant real estate market has slowed drastically.
Just as in the Northeast in recent years, California sellers accustomed to huge annual increases in housing prices have been shocked by how low the offers have come in. Some are dropping their prices to meet the highest bid, and housing prices are now falling in many areas. But in other cases they are either taking their houses off the market or leaving them on and refusing to budge much on the price.
Volume of Sales Down
As a result, the pace of housing sales in California has been dropping even more quickly than the price. Figures released Monday by the California Association of Realtors indicated that the rate of houses sold fell in July to its lowest level since December 1985. The seasonally adjusted annualized rate of sales last month for existing single-family houses was 419,943, down 15 percent from July 1989. Construction of new houses is also off sharply.
And while prices in some inland cities like Sacramento continue to rise, prices are dropping in the population centers along the Pacific Coast. The median price of a single-family house sold in Monterey was down 9.3 percent from July 1989, and in Los Angeles it was down 4.5 percent. Prices in Santa Barbara dropped 2.9 percent from a year earlier. In the San Francisco Bay area, the drop was 1.8 percent.
Statewide, the median house price in July, at $194,099, was down 3.7 percent from a year earlier, when the statewide figure peaked at $201,653.
After the heady atmosphere that made this one of the nation's most overheated housing markets for the past several years, the new reality has come as a shock. Starting in 1986, prices rose as much as 30 percent annually in some areas, with the sharpest increases in 1987 and 1988.
Even with such increases, buyers found themselves in bidding wars that often pushed the selling price above the original asking price. Their willingness to pay reflected a belief that the house would be worth even more within a few months.
The ''buy at any price'' mentality seemed by late last year to have finally outrun the ability or willingness of many people to buy a house, and has disappeared this year. With the sales rate down and so many houses on the market, the pressure to lower prices is even greater, and many analysts expect prices to fall further, particularly if the national economy, now burdened by the Middle East crisis, descends into a recession.
But while the rapid deceleration of the housing market on the California coast resembles that of the Northeast, there are a number of important differences. Since prices in the Northeast have been falling longer and farther than here, more sellers have taken losses. And the Northeast's economy is weaker than California's.
In the view of many real estate agents here, the slump is nothing more than a temporary cooling. Californians continue to recite a litany of factors they think will keep the housing market from going into a steep dive, including the state's diversified economy, widespread restrictions on building that have limited the supply of housing and its strong population growth. Early census figures show that the state's population has topped 29 million, for an explosive 23.7 percent rise in a decade.
No Strength Left
Despite such optimism, the housing market in California is so enervated that the Kaufman & Broad Home Corporation, the state's largest house builder, recently started offering to pay closing costs for new-house buyers, an incentive worth about $10,000. The Marina City Club, a condominium complex in Marina Del Rey, has cut prices up to 22 percent. A developer in Lancaster, in the Mojave Desert north of Los Angeles, recently cut prices on some houses to less than $200,000, from $245,000, infuriating owners of identical neighboring houses who paid the developer full price just a few months ago.
More than a year ago, Charles M. Harker put a three-bedroom, two-bath house in the Los Angeles suburb of La Canada on the market for $497,500. The house, which he bought and remodeled as an investment, remains unsold, with the price slashed to $445,000 and Mr. Harker and a partner close to the point where their chance for a profit would evaporate.
''The market just came unglued,'' said Mr. Harker, an accountant. ''Many of us looked at it as though the strong market would continue. We didn't see the fall coming quite so fast.''
In November, Ann Pettijohn, a broker in Orange County, listed a three-bedroom house in the planned community of Irvine. The owner was being transferred, and had turned down an offer to sell the house to his company for $325,000, convinced that he could get a higher price.
'No One Buying Anymore'
The house remained on the market for six months at $339,000 before the owner finally gave up and accepted the company's offer. The company has had the house on the market through another broker for $319,900 and just accepted an offer that Ms. Pettijohn said was probably in the $315,000 range.
''That's a common scenario,'' Ms. Pettijohn said. ''The house eventually did sell, but the market in 1989 was $339,000 and in 1990 it's $315,000 to $319,000. It's like someone blew a whistle that only dogs and buyers could hear, and suddenly there's no one buying anymore.''
Few sellers are actually losing money. Except for those who bought at the peak last year and must sell now, most homeowners are still far ahead on paper after the double-digit price increases of previous years. As a result, banks and savings and loan associations in California report no upswing in foreclosures on residences, and most analysts say the state's financial institutions will weather the slump without any significant damage.
The Economy Is Rattled
Still, the downturn is extremely unsettling in California, where analysts already see signs of vulnerability in an economy that has enjoyed robust growth longer than almost every other region of the country. The economy is being rattled by huge layoffs in the aerospace and military contracting industries. Commercial real estate developers and brokers are being battered by a glut of new office space. Permits for construction of residential housing declined to an annual rate of about 160,000 in June from an average of 238,000 last year, prompting the beginning of a decline in construction jobs.
And some analysts say California's economy and its housing market are in for tougher times.
''With the economy at risk in the future, we couldn't have hit bottom yet in the housing market,'' said David Hensley, an economist with the business forecasting project at the University of California at Los Angeles. ''I'd expect further erosion in sales and probably prices too.''
'Cyclical Downturn'
Richard A. Snyder, a broker in San Diego who is chairman of the California Association of Realtors' long-term planning committee, said: ''We are in an adjustment period. My personal view is that we are going into a cyclical downturn that could last one-and-a-half to two years.''
But, Mr. Snyder added, ''We will in fact weather the storm and we won't see the price decreases you have seen in the Northeast.''
There are a few bright spots in the state. Sacramento and other inland cities, where prices are far lower than along the coast, continue to see increases in sales volume and price. In a state where only 18 percent of households can afford the median-priced house, according to the Realtors association, the lowest-priced houses are selling briskly.
But most of the state is facing a wrenching readjustment. Jim and Marilou Brown put their house near Santa Barbara up for sale in June 1989, asking $289,000, roughly the same price that a similar house down the street had sold for a few months earlier. Mr. Brown, a newspaper editor, moved immediately to Florida with the couple's son to start a job there, while Mrs. Brown stayed behind for what they thought would be several months.
An 11-Month Ordeal
But the house did not sell until May, 11 months later, and only after the Browns dropped their price by nearly 10 percent, to $263,000. In the end, after accounting for capital gains taxes and $25,000 in improvements they made, Mr. Brown said they barely came out ahead despite having purchased the three-bedroom house at the beginning of the boom in 1986 for $187,000.
''It was a bust as far as our expectations were concerned,'' Mr. Brown said. ''We didn't lose, but we certainly didn't come out with diamonds and rubies and gold fillings. It was kind of a shock because when I left California, the boom was still going on.''
Real estate agents by and large say they remain optimistic. Ms. Pettijohn, the broker from Orange County, said she got a call the other day from an investor who had stopped buying properties last fall, asking her to suggest some good values.
''When your investor buyers start calling,'' she said, ''you begin to think they're sniffing the bottom of the market.''
ANDREMIKE
10-25-06, 09:20 AM
you have to report the work to your county so they have the higher square footage in their database
I don't think I want to tell the county how big my house is. MORE square footage = more taxes...
I wonder if that was done. I had permits pulled for all the work.....
al_bundy
10-25-06, 10:07 AM
i wouldn't worry about zillow since only a moron would take their numbers at face value without doing their own comps
X
10-25-06, 11:48 AM
interesting article i found a link to. notice the date, and we all know what happened next
The median price of a home in California in 1990 was $193,770. In July 2006 it was $567,360. That's almost a 300% gain in 16 years. Not bad.
al_bundy
10-25-06, 12:07 PM
2000 less than 5% of loans were ARM or some other type of short term financing. By the start of 2006 it was over 50%.
how many people can afford the median priced home on a 30 year fixed?
SpaceBoy
10-25-06, 03:12 PM
I did a 5 year ARM, and could afford a 30 year fixed, just didn't see the need to. I figured I would prob refiance within 5 years anyways.
Jack Straw
10-25-06, 04:09 PM
i usually say buy anytime you can afford, but there is no way in hell i would buy anything in california for a few years. i hear rents are something like 1/3 the house payment WRONG! It is definitely not a renter's market these days. Basic 2 bedroom apartments are going for $1,500-$1,750/mos. My apt. complex has refused to renew my lease cause they want to remodel my unit and rent it for $200 more a month. It's f-in' crazy in So. Cal. (Ventura Co.)
fujishig
10-25-06, 04:54 PM
WRONG! It is definitely not a renter's market these days. Basic 2 bedroom apartments are going for $1,500-$1,750/mos. My apt. complex has refused to renew my lease cause they want to remodel my unit and rent it for $200 more a month. It's f-in' crazy in So. Cal. (Ventura Co.)
But how much would it be to BUY a similar 2 bedroom apartment?
I live in SoCal as well, and though rents may be increasing, that's nothing compared to what the mortgage payment would be on a similar place.
BadlyDrawnBoy
10-27-06, 05:27 PM
I own a TIC with a partner, basically we are both on the same loan.
we bought for 1.1M Jan 04, he is selling his place now still as a tic, not a condo for 950K (http://www.sfarmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N450191698,-N199063,-N,-A,-N5567900) ...
I'm pretty sure he has spent at least 100 and probably 125K remodelling it.
The Bus
10-27-06, 05:36 PM
WRONG! It is definitely not a renter's market these days. Basic 2 bedroom apartments are going for $1,500-$1,750/mos. My apt. complex has refused to renew my lease cause they want to remodel my unit and rent it for $200 more a month. It's f-in' crazy in So. Cal. (Ventura Co.)
Could you buy a comparable condo for $150,000 to $250,000?
If not, then it's a renter's market.
kvrdave
10-27-06, 06:30 PM
I own a TIC with a partner, basically we are both on the same loan.
we bought for 1.1M Jan 04, he is selling his place now still as a tic, not a condo for 950K (http://www.sfarmls.com/scripts/mgrqispi.dll?APPNAME=Sanfrancisco&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N450191698,-N199063,-N,-A,-N5567900) ...
I'm pretty sure he has spent at least 100 and probably 125K remodelling it.
Is that a "Tenants In Common?" And if it is, is it basically a duplex and he is selling his side?
My market is still nuts, and I'm waiting for it to slow down. I'm tired. :(
slop101
10-27-06, 06:44 PM
Could you buy a comparable condo for $150,000 to $250,000?
If not, then it's a renter's market.Typical 2-bedroom condos here in So.Cal., that aren't in the "ghetto", are almost double that. And more than triple in the nicer neighborhoods.
kvrdave
10-27-06, 06:52 PM
So a $400,000 place is bringing in about $1,750? That's only a 5.25% return on the gross. Once you add in expenses like taxes, insurance, utilities, etc. you are probably going to be under a 4% return, which is less than a good money market. Obviously people are banking on appreciation because otherwise it sucks as an investment. That is definately a renter's market.
BadlyDrawnBoy
10-28-06, 12:20 AM
yeah dave tic is tenancy in common, pretty popular in SF.
Aphex Twin
10-28-06, 02:29 AM
So a $400,000 place is bringing in about $1,750? That's only a 5.25% return on the gross. Once you add in expenses like taxes, insurance, utilities, etc. you are probably going to be under a 4% return, which is less than a good money market. Obviously people are banking on appreciation because otherwise it sucks as an investment. That is definately a renter's market.
But you are assuming that someone would pay off the entire $400,000 right away?
kvrdave
10-28-06, 03:24 AM
But you are assuming that someone would pay off the entire $400,000 right away?
Whether or not you have a loan on the property doesn't matter. The rate of return is based on the net income and the purchase price. All a loan would add to the mix is cash flow potential.
al_bundy
10-28-06, 12:02 PM
So a $400,000 place is bringing in about $1,750? That's only a 5.25% return on the gross. Once you add in expenses like taxes, insurance, utilities, etc. you are probably going to be under a 4% return, which is less than a good money market. Obviously people are banking on appreciation because otherwise it sucks as an investment. That is definately a renter's market.
there was someone here who wanted to buy a second home last year, take a loss on the rent and hope to make it up in capital gains over a few years. I've read other stories over the last few years of people planning on this. Mention the rate on a MM or some other risk free return and it's like talking to a blank wall.
BadlyDrawnBoy
11-03-06, 05:08 PM
downstairs place had an offer accepted yesterday for 1,000,000.
Madness.
X
11-03-06, 05:15 PM
Makes you wish you bought the whole place yourself and rented out that unit, doesn't it?
Deftones
11-03-06, 05:17 PM
Yeah, but the guy put in alot of work on the unit, right bdb? Like $150k or something. I'm sure everyone would love that kind of return on their money, but it's not like they have that kind of scratch to blow through.
The Bus
11-03-06, 05:23 PM
there was someone here who wanted to buy a second home last year, take a loss on the rent and hope to make it up in capital gains over a few years. I've read other stories over the last few years of people planning on this. Mention the rate on a MM or some other risk free return and it's like talking to a blank wall.
Yeah, when your cap rate is low (or negative) you need a lot of appreciation for the investment to make sense.
BadlyDrawnBoy
11-03-06, 06:28 PM
yeah he put about 150 into and every hour he had for the last year and a half.
impressive haul though.
al_bundy
12-19-06, 03:13 PM
PPI numbers out today, up 2% which is a huge increase
The Fed may have to raise rates again in the near future which will hurt anyone with an adjustable rate loan
X
12-19-06, 03:15 PM
If you average the last month's numbers with the previous couple of months it's still very low. This month may have just been catch up. Not to mention a few extraordinary increases in particular items that won't keep happening.
I think the next couple of months will better show which direction it's going. But it doesn't hurt to keep wishing for rate increases, it could happen.
Deftones
12-19-06, 04:06 PM
Next year will remain flat, but in 2008 it will pick up again. You heard it here first. ;)
The Bus
12-19-06, 04:10 PM
PPI numbers out today, up 2% which is a huge increase
The Fed may have to raise rates again in the near future which will hurt anyone with an adjustable rate loan
That's possible but the Fed doesn't pay much attention to PPI (compared to PCE). The markets have barely responded to the news. The retail announcement from last week was much more surprising.
al_bundy
12-20-06, 05:46 PM
we'll see what happens next year, but i just got the annual coop report from the board of directors from my building. Highest sale price for the year for a one bedroom apartment is up around 25% from last year's highest price
The Bus
01-16-07, 10:23 AM
Buyers Scarce, Many Condos Are for Rent
http://graphics8.nytimes.com/images/2007/01/16/business/16rentals.xlarge1.jpg
The Columbia, above, formerly the Columbia Hospital for Women, is a new complex of condos in the Foggy Bottom section of Washington. An owner who bought a two-bedroom unit in 2004 is facing having to sell it at a loss or rent it for less than his monthly payment.
By VIKAS BAJAJ
Published: January 16, 2007
WASHINGTON — David Franco’s illuminated model of a proposed 10-story condominium tower dominates a sales center that, in spite of the “Now Selling” banner still fluttering outside, is conspicuously closed for business.
“We could have waited it out and kept pushing and pushing,” Mr. Franco said about the decision to abandon plans to sell 180 luxury condominiums with floor-to-ceiling windows offering views of the Washington Monument and Capitol Hill. “But it would have taken significantly longer.”
After six weeks of failing to lure more than a couple of dozen buyers, Mr. Franco and his partner, Jeff Blum, joined the builders of nearly 6,000 condominium units in the Washington metropolitan area who have decided in the last three months to recast their projects as rental apartment buildings.
Since the middle of 2006, the frenzied condominium market here and in several other big cities like Las Vegas, Miami and Boston has collapsed. Once roaring sales have slowed to a trickle, sparse inventory has mushroomed into a glut and soaring prices have flattened out and started falling.
In many cities, banks have significantly scaled back loans to condominium builders. Some have demanded that developers sell half or more of the units in a building before even beginning construction.
In hopes of salvaging something from their costly plans, hundreds of developers like Mr. Franco are looking to the strong market for apartments, planning to rent their units for at least a couple of years while waiting for today’s condo surplus to shrink. Mr. Franco and Mr. Blum hope to break ground on what will be a somewhat less expensive building this spring.
In some cases, developers are even turning older buildings back to rentals after a brief or aborted attempt at condo conversion. Meanwhile, another 2,500 proposed condominiums in the Washington area have been scrapped altogether, according to Delta Associates, a real estate research firm.
The latest salvage operation on the part of condo developers is far from a sure bet, however. Condominium buildings generally cost more to build and operate than those built for apartments from scratch. And while rents are high and rising in most cities, in many cases they still are not sufficient to turn a profit.
Industry analysts also point out that rents may start sagging if too many condos are converted into apartments too quickly. While rents were rising at a robust 6.1 percent annual pace in the Washington area late last year, according to the Bureau of Labor Statistics, some buildings in the suburbs have recently started promoting move-in specials and other incentives to lure renters.
“You can do it, but it isn’t as attractive,” Tom Meagher, a Boston real estate consultant, said about converting condos into apartments. “You are not going to get enough rent to cover the cost. You might have to go back and redesign the floor plans.”
In the Boston area, Mr. Meagher is tracking 600 condo projects representing about 49,000 units in various stages, from applying for permits to active construction. While the recent slowdown is forcing developers to consider converting their projects to apartments and offices, he expects as many as a third of them will never be built at all.
Mr. Franco said that he and Mr. Blum were able to cut 10 percent from the costs of their planned building, on land in the trendy U Street corridor. That should be enough to make a profit, he said. Beyond switching to some less expensive materials, they also decided to subdivide some larger units into smaller apartments.
The partners are now going through a similar financial exercise on another proposed building across the street, which was to house 225 condominiums but now could be recast as a rental building as well.
Lenders started tightening the purse strings for the condominium market in early 2006 as sales weakened first in cities like Miami and Las Vegas.
“Did the lenders pull back soon enough?” asked Robert Brennan, managing director of real estate finance at Credit Suisse in New York. “I don’t think we know yet.”
Real estate experts say condos are more susceptible to booms and busts than single-family homes are because they attract more investors who do not intend to live in them and are easier to build than a new subdivision in many cities.
And while there are tentative signs that the worst of the overall housing slump may be easing as builders cut back and interest rates remain relatively modest, condo markets continue to suffer.
Take the owner trying to sell a spacious two-bedroom condo for $879,000 in the former Columbia Hospital for Women, which closed in 2002, in the Foggy Bottom neighborhood of Washington. In 2004, the investor was so confident that he would make a handsome resale profit that he told his agent, Thomas P. Murphy, he wanted to buy five condos. Mr. Murphy said he flatly told his client he would only assist him in purchasing one unit in any one building.
“He needs $890,000 to break even, but the offers are at $800,000 to $840,000,” Mr. Murphy said. “He does remember that I told him he was not getting five of them.”
Could he rent the condo? Yes, but that option is not appealing, either. Mr. Murphy estimates that the unit could rent for $4,000 a month, far short of the $6,800 a month the condo costs in mortgage interest, maintenance fees, insurance and taxes.
“They have a choice of how they want to lose it,” Mr. Murphy said of investors and condo developers. “Drip by drip or in one slap.”
Mr. Murphy said he believed condo sales had picked up somewhat lately and he even ran a four-way bidding contest on one well-priced condo in Foggy Bottom, near the State Department. But the supply of newly built condos is so large and so many of them are similar to each other that many sellers are having to sharply cut their asking price. Others have simply given up.
At the end of 2006, 24,200 units were on the market in the Washington area, up from 13,000 at the start of 2005. Sales have slowed to 663 in the fourth quarter of 2006 from 3,520 in the first quarter of 2005, according to Delta Associates. Recorded prices have been flat, which probably masks an effective decline since only the most attractive properties are selling and many owners throw in extra inducements that do not show up in official figures.
One of the few exceptions to the trend is in Manhattan, particularly at the high end. Condo and co-op sales increased to 2,441 in the fourth quarter, from 1,574 a year ago, and inventory was relatively flat at 5,900, said Jonathan J. Miller, an appraiser. Much of the increase can be attributed to a legal change in how sales of co-ops are recorded, but Mr. Miller said a 5.5 percent drop in prices from the third quarter also helped.
Nationally, condominium sales have fallen further than those of single-family properties, 13.6 percent from November 2005 to the same month in 2006; free-standing homes showed a 10.7 percent decline in the same period. Inventories have risen 38.1 percent for condos and 29.6 percent for individual homes, according to the National Association of Realtors. The national median price — half the condos sold for more and half for less — was $224,600 in November, unchanged from November 2005.
But there is no comprehensive, national source of data for new condominiums sales. The Realtors group only measures sales of existing units and the Commerce Department, which tracks sales of new single-family homes, does not collect data on condominiums.
In the recent housing boom, many cities welcomed condos, hoping the young, upper-income set they attract would help revitalize older neighborhoods. In some cities, condominium construction also gave municipal officials an opportunity to demand that developers set aside some units for affordable housing in exchange for zoning and building approvals.
In Washington, the area around 14th and U Streets was one of several formerly run-down neighborhoods to get a facelift largely from new condo projects. The area was once a hub of African-American civic and cultural life, but the neighborhood was ravaged by riots in 1968 after Martin Luther King Jr.’s assassination and fell into decades of neglect and disrepair.
The area has now become home to trendy cafes, a Whole Foods grocery and other stores. But signs of its hardscrabble past linger on in dilapidated apartment buildings and storefronts. The influx of transplants from nearby Dupont Circle and Adams Morgan has also raised the usual strains that accompany gentrification — rising rents, increased traffic and the displacement of local residents.
Mr. Franco, who lives in the neighborhood, said he was sensitive to those concerns. His company, Level 2 Development, contributed $1 million to help a group of tenants in low-income apartments buy their building as part of a deal with the local government for the approval of his condo project.
He had hoped to take up residence in a 3,200-square-foot corner unit with an expansive terrace, which will now be cut up into smaller rental apartments.
But as he drove around the neighborhood recently pointing out rows of redeveloped buildings, he acknowledged that the market might have reached its limit for now. As an example, he pointed to a used car lot that seemed to be a vestige of a bygone era.
“The reality is not everything can make way for condos,” Mr. Franco said. “This guy may be doing so much business that it has far more value than what a real estate sale can fetch.”
GradVT06
01-16-07, 10:36 AM
I sure hope there's plenty of houses in my price range and desperate sellers with few buyers come summer where I live! I'm very much looking forward to my first house!
al_bundy
01-24-07, 09:15 PM
http://www.paperdinero.com/BNN.aspx?id=50
looks like the homebuilders will start giving homes away this year, can't be good for comps
al_bundy
01-24-07, 09:16 PM
I sure hope there's plenty of houses in my price range and desperate sellers with few buyers come summer where I live! I'm very much looking forward to my first house!
don't know about this year, but i'll probably buy something else in 5 years or so. even if there is no crash the prices aren't going up for another 10-15 years so there is plenty of time
X
01-24-07, 09:28 PM
don't know about this year, but i'll probably buy something else in 5 years or so. even if there is no crash the prices aren't going up for another 10-15 years so there is plenty of time10-15 years? Right...
drmoze
01-24-07, 10:04 PM
don't know about this year, but i'll probably buy something else in 5 years or so. even if there is no crash the prices aren't going up for another 10-15 years so there is plenty of time
Hate to break it to you Al, but in the NYC area, prices are still going up even though most other places are showing a decrease. (And rentals in Manhattan are just getting more ridiculous! The general starting price for a studio (400-450 sq. ft. or so) is around $2000/month.)
Waitaminute, aren't you the guy who started this thread with this title back in June of '05? Prices around here have done nothing but go up significantly since then. (Much to my loft-owning joy...)
The Bus
01-24-07, 10:08 PM
10-15 years... :lol:
Even the stock market is more resilient than that.
al_bundy
01-25-07, 08:56 AM
Hate to break it to you Al, but in the NYC area, prices are still going up even though most other places are showing a decrease. (And rentals in Manhattan are just getting more ridiculous! The general starting price for a studio (400-450 sq. ft. or so) is around $2000/month.)
Waitaminute, aren't you the guy who started this thread with this title back in June of '05? Prices around here have done nothing but go up significantly since then. (Much to my loft-owning joy...)
NYC has gone up, but the burbs are flat
al_bundy
01-25-07, 09:05 AM
for all you bulls i work with someone who bought a home at the last peak in the NYC burbs in a very nice neighborhood. he said he was upside down on his loan until a few years ago. Around 12 years. i've read a lot of stories of people who bought in the late 1980's or early 1990's and sold for a loss in the late 1990's
The Bus
01-25-07, 09:27 AM
for all you bulls i work with someone who bought a home at the last peak in the NYC burbs in a very nice neighborhood. he said he was upside down on his loan until a few years ago. Around 12 years. i've read a lot of stories of people who bought in the late 1980's or early 1990's and sold for a loss in the late 1990's
Well, I'll be fair. You were referring to buying in your area, and that may be the case. Generally, any big economic depression or massive layoff in a semi-secluded area will squash prices and keep them the same for a very long amount of time. I've spoken with a few people from Detroit and they've told me property prices are dismal there. I think the average $1MM+ home takes over a year to sell (from what I've heard anecdotally).
Around here, another example would be some of the Pennsylvania steel towns. Many saw drops in prices in the 80s, many haven't seen price increases in a decade (and we're talking $110,000 homes). Out west near Pittsburgh, there was a town that was built exclusively for one mining or manufacturing plant that closed down. I talked to someone who said houses were about $25,000 but there was no economy to speak of.
Family members in NoVa also said that for a while in the early and mid 90s, their house value was flat. So it can happen. But I wouldn't bet on it happening, on average, nationwide, especially for such a long time period.
Coral
01-25-07, 12:43 PM
http://www.msnbc.msn.com/id/16806979/
The real estate market has been simmering a bit in Canada, but overall it's holding up well to the decreasing demand. I'm looking to a buy a house and a nose dive in the market would help me nicely with decreased prices and increased selection. Of course I'm not expecting a nose dive to occur until the day after I make a purchase. :mad:
Yikes... Almost a 40bp difference since yesterday in MBS.
al_bundy
01-26-07, 09:01 AM
i'm waiting to see the effects of the growing foreclosure rate on long term yields. IBD had a story last night and it looks like the latest numbers are still $1.5 trillion of ARMs set to reset this year. If long term rates are going up it's going to make refinancing a lot harder.
And of course there was a story about how a lot of mortgages made in late 2005 through early 2006 are foreclosing in california right now and the rate is growing
GradVT06
01-26-07, 09:08 AM
I'm just hoping sellers will be desperate and there will be a ton of houses on the market this summer!
al_bundy
01-26-07, 09:11 AM
RE varies market by market, but cycles take years to play out. The last boom ended in 1989 or 1990 and the down cycle lasted until around 1997. RE in NYC was so cheap back then that in the outer boroughs you could buy an apartment in a good school district for about what your annual income was.
the 10 year T-Bill yield which is the benchmark for a 30 year mortgage is on a roar. chart shows higher highs and higher lows. We might see 6% again and 7.5% 30 year mortgage rates by the end of 2007.
I wouldn't want to buy an RE now unless you absolutely have to. rates have gone up in the last 3-4 years and RE prices have been going up as well. not a good combination. Even in the late 1980's RE boom the 30 year rates dropped since the peak in 1981
The Bus
01-26-07, 09:31 AM
RE varies market by market, but cycles take years to play out. The last boom ended in 1989 or 1990 and the down cycle lasted until around 1997. RE in NYC was so cheap back then that in the outer boroughs you could buy an apartment in a good school district for about what your annual income was.
Just got off the phone with a friend in So. NJ. He said when he bought his previous house in the early 90s, it was $100,000. The seller had bought it for $125,000 a few years earlier. They sold it in the late 90s for $150,000, and two years after they sold it it was on sale for $220,000. Now neighborhood is in the $270,000 range.
It looks like (in NJ at least), they hiked up the assessed values and houses are now selling for way below their assessed value.
All anecdotal of course, but interesting.
al_bundy
01-26-07, 09:57 AM
westchester, nassau, suffolk and NJ is crazy with their property taxes. from what i understand all the towns are independent and can even tell the county to go away. and from what i understand the schools are tied to the town and not the county because people from one town don't want the poor kids from another in their school. goes back to "white flight" from the 1980's. so each town has it's own school system and that means you have to pay for the same functions like HR and retirement in every town and every year they raise taxes because union retirement benefits are paid first. every year they come out with the horror stories of they will cut after school programs, busses and AP classes unless taxes go up and people agree because they work and need to pay for after school programs which is a federally subsidized babysitting program
Red Dog
01-26-07, 10:42 AM
I'm just hoping sellers will be desperate and there will be a ton of houses on the market this summer!
I've planning on the same thing, but the way things are going, I'm considering waiting even another year.
with all this ethanol nonsense there is no place for bond yields to go but up
X
01-26-07, 11:43 AM
It looked like you were rooting for bonds to go up. You were just commenting on them?
The Bus
02-15-07, 03:31 PM
Home builders' confidence returns
Index rises to 40 in February, highest since last June
By Rex Nutting, MarketWatch
Last Update: 2:01 PM ET 2/15/07
WASHINGTON (MarketWatch) -- U.S. home builders are still pessimistic, but are growing much more confident in the housing market, according to a monthly survey released Thursday by the National Association of Home Builders.
The NAHB/Wells Fargo housing market index rose to 40 in February from 35 in January. It's the highest since June 2006. The index had fallen to a 15-year low of 30 in September. A year ago, the index was at 56. The index has been below 50 for 10 months.
In the 1989-92 housing slowdown, the index was below 50 for 36 consecutive months; it took 18 months for the index to go from 40 to 50
A reading of 50 would indicate builder sentiment is equally divided between those who view the market as good and those who see it as bad.
About 40% of builders are confident about the market, the index shows.
"This improvement in the NAHB is consistent with further improvements in housing starts," wrote Drew Matus, an economist for Lehman Bros., in a note to clients.
But another economist said housing "is not out of the woods yet." Economist Patrick McPherron of Moody's Economy.com wrote in a research note to clients that lending standards are likely to get much tighter this year
Over time, the index is correlated with housing starts, which have fallen 18% in the past year. The Commerce Department will report on January starts and building permits on Friday. The median forecast in the MarketWatch survey sees starts falling another 2.6% in January to 1.60 million, while building permits are expected to drop 2% to 1.58 million. See Economic Calendar.
All three components of the index improved in February. The current home sales index rose to 42 from 36, the buyers' traffic index rose to 31 from 26 and the future sales index rose to 55 from 47, the first reading above 50 since June.
"It now appears that homebuilders may be too optimistic on future conditions, since starts and sales still have to work off large inventories," wrote Joshua Shapiro, chief economist for MFR, in an email to clients.
Builders in all four regions were more optimistic in February. The Northeast and South were the most optimistic at 46. Builder sentiment in the West was at 35, while sentiment in the Midwest was at 29.
"Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear-view mirrors and they see better times as they look at the road ahead," said David Seiders, chief economist for the home builders, in a press statement.
The results are "consistent with Federal Reserve Chairman Ben Bernanke's assessment to Congress this week that there are signs of stabilization on the demand side of the housing market," Seiders said.
Nothing scientific or economic, but it seems to point towards a "soft landing" that's been referenced so many times, rather than a staggering nationwide freefall that leaves no Colonial 4-bedroom unturned.
We're coming up on two years for this thread. In the past year, mortgage backed securities have fared better than they have for a while, and it is not unplausible for rates to keep getting better. If house prices can remain level or increase at a corrected pace (under 5%), then housing will slowly become more and more affordable.
And then there can be a whole 'nother boom.
BadlyDrawnBoy
02-15-07, 03:39 PM
Did Bernanke just indicate that he sees a rate reduction this year?
X
02-15-07, 03:41 PM
Yes, I have seen no sign of anything other than a soft landing.
The stock market is up substantially in the last few days primarily on the Fed's statements on the future of the economy and even the possibility of rates being lowered later this year.
The Bus
02-15-07, 03:53 PM
Did Bernanke just indicate that he sees a rate reduction this year?
From the statement:
In the five policy meetings since the July report, the Federal Open Market Committee (FOMC) has maintained the federal funds rate at 5-1/4 percent. So far, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation. However, in the statement accompanying last month's policy decision, the FOMC again indicated that its predominant policy concern is the risk that inflation will fail to ease as expected and that it is prepared to take action [raise rates] to address inflation risks if developments warrant.
Emphasis and brackets mine.
The risks to this outlook are significant. To the downside, the ultimate extent of the housing market correction is difficult to forecast and may prove greater than we anticipate. Similarly, spillover effects from developments in the housing market onto consumer spending and employment in housing-related industries may be more pronounced than expected. To the upside, output may expand more quickly than expected if consumer spending continues to increase at the brisk pace seen in the second half of 2006.
I turn now to the inflation situation. As I noted earlier, there are some indications that inflation pressures are beginning to diminish. The monthly data are noisy, however, and it will consequently be some time before we can be confident that underlying inflation is moderating as anticipated.
The end is interesting: he keeps saying he wants increased transparency. And he's making it clear that the data isn't completely there yet to make a decision. Overall, he seems to make it pretty clear that there's no information leading them to need to change rates in any direction. (And even as recently as November or December, IIRC, one of the regional members was talking about raising rates).
al_bundy
02-15-07, 05:22 PM
too lazy to link but here are the stories i'm reading
the subprime market is imploding. HSBC is writing off billions of $$$ in loans, subprime lenders continue to go bankrupt every few weeks.
Last numbers I read is still $1 trillion to $1.5 trillion in ARM's to adjust this year
there was a report last year that predicted over 2 million subprime foreclosures over the next 2 years. average is around 7-8 million homes sold every year. that's over 10% more inventory in addition to the crazy inventory numbers in some markets right now
I've read before that 9 months housing inventory is considered a bubble popping or a major housing downturn. Quite a few markets have more than that and a few are at 2-3 years inventory based on current sales trends. I think we are 7 months or so for the national average up from 3 back in 2005
Prices are down in a lot of markets and this is bad news for ARM holders who had 100% LTV loans and will be looking to refi this year out of a rate increase
forgot the details but at least a few states and maybe even the feds just adopted rules to require borrowers to qualify for the highest rate and payment in an ARM/IO loan
the spread is going up in the subprime market, rates and loan qualifications are going up pricing a lot of people out of the real estate market
Foreclosures are skyrocketing almost everywhere
OC Register had a story where they said the amount of people late on property taxes is skyrocketing as well
reports on the internet of some markets having homes being sold for 2005 and 2004 prices
homebuilder cancellations are still going up and in a lot of markets they are using upgrades and other incentives to sell for the same amount of money as 2005
vacancy rate is a lot higher now than in the last housing bust indicating there is still a lot of speculators in the market
I wouldn't be surprised if there is a rate decrease later this year to offset the ARM resets, but current foreclosures will start hitting the market at that time and with the high vacancy rate there will be a search for buyers and I think it will cause prices to go down as banks unload the liabilities and the people trying to refi may not be able to when their appraisal comes up too low
subprime MBS securities had a bad day last week and there is a risk to the dollar and mortgage rates no matter if the fed lowers rates since the spread can go up
Quick summary
there are still a lot of empty homes out there bought by speculators who bought 5, 10 or 20 homes at once and i doubt there will be enough real buyers this year to buy them up
there are stories on the internet that there may be a credit crunch starting in the subprime market. the subprime market is one reason for the RE boom and a credit crunch will take out a lot of potential buyers
I read what the so called experts say, but they have been wrong a lot of times in the past. 2 years ago people thought some of the bubble blogs were a joke, but a lot of the things they were saying might happen have happened while most of the experts were saying otherwise. Just look at what people were saying at my theory when i first started this thread and a lot of you have been wrong. even a lot of experts are saying the peak was right about the time i started this thread.
economy is OK, but I still think the biggest problem is affordability. I can buy a $400,000 home but I refuse to live paycheck to paycheck and worry that a lay off will mean foreclosure. Low inflation was the 1990's when you could buy a nice home for a lot less than 3 times the average income. And of course i hear that in a lot of places including california you can rent for 1/2 to 1/3 the price to buy a comparable home or condo. usually from a speculator who is losing hundreds of $$$ a month because the rent you pay is not covering his or her expenses for the home
The Bus
02-15-07, 05:51 PM
too lazy to link but here are the stories i'm reading
the subprime market is imploding. HSBC is writing off billions of $$$ in loans, subprime lenders continue to go bankrupt every few weeks.
Prices are down in a lot of markets and this is bad news for ARM holders who had 100% LTV loans and will be looking to refi this year out of a rate increase
That and a lot of the Wall Street investors doing subprime MBS (Lehman, etc) are tightening up a lot of their requirements.
Properly planned, ARM increases/changes shouldn't be a problem. Everyone who takes them should undestand that they are temporary, or that the "real" effect is that they won't "feel" the change. Subprime ARMs are the only ones that are a significant problem because they have such a short maturity: 2- or 3-years, with Interest Only periods often matching them.
The only people who are really screwed now are people that went for the MTA / "Pay Option" / Negative Amortization / Quicken Loan mortgages. Once Prime and LIBOR falls, MTA is going to fall too: but much slower, so they'll be paying higher rates for a while longer compared to others and may not even feel the need to refi because they still have the artificiallow low minimum payments.
al_bundy
02-15-07, 05:56 PM
i think the risk was that in 2003 - 2005 when a lot of these loans were made the people buying the homes were all dreaming of endless 20% appreciation in home prices and the ability to sell overnight. today there are plenty of stories of homes staying on the market for months and of price declines in many markets that bring down comps and people's ability to sell or refi.
there was also a study done last year that said that even though home prices boomed, there was a record low amount of equity because of home equity extraction. so just because someone bought in 2003, they may have "cashed out" equity for whatever and may soon be upside down depending on when they took out the HELOC and for how much.
i remember i was at Home Depot Expo Design Center a few years back looking at kitchens. This is in a normal middle class neighborhood. Salesman said average price of their kitchen was around $80,000 plus $20,000 for installation. I almost choked wondering where someone gets that kind of money for a kitchen renovation and who would be crazy enough to spend it on what is really one tree worth of wood and wood pulp.
The Bus
02-17-07, 12:18 AM
Merrill and others are really starting to put the screws on subprime lenders. This is good, to an extent. You don't want there to be too much risk but you want there to be a market for subprime borrowers so you don't artificially restrict the amount of prospective buyers.
it seems like only yesterday they were having condo sales parties and people were camping out for 3 days to get a chance to buy pre-construction
al_bundy
03-05-07, 08:53 AM
subprime lenders are dropping like flies
20 or so went belly up in the last year. Some spectacular stock drops on wall street like when NFI dropped 50% in a day. Latest one is New Century and there is word of a criminal probe.
The Bus
03-06-07, 10:52 AM
subprime lenders are dropping like flies
20 or so went belly up in the last year. Some spectacular stock drops on wall street like when NFI dropped 50% in a day. Latest one is New Century and there is word of a criminal probe.
Fremont stepped out on Friday as well. They're much bigger in California. One of HSBC's subsidiaries just released their guidelines and they're practically identical to Fannie Mae's.
This is pretty interesting: http://ml-implode.com/ Apparently it was featured on the Today show.
The first major one seemed to be Acoustic Home Loans in California late last year. They closed about two weeks before our last settlement with them.
Lateralus
03-06-07, 12:37 PM
Fremont stepped out on Friday as well. They're much bigger in California. One of HSBC's subsidiaries just released their guidelines and they're practically identical to Fannie Mae's.
This is pretty interesting: http://ml-implode.com/ Apparently it was featured on the Today show.
The first major one seemed to be Acoustic Home Loans in California late last year. They closed about two weeks before our last settlement with them.
Thanks, I was looking for that site, 33 since late 2006. With all these people not paying the morgages I would expect house prices to come down a lot faster then they are.
pedagogue
03-06-07, 12:51 PM
The Bus....how does that work, are you f'd out of your money?
-p
The Bus
03-06-07, 01:10 PM
The Bus....how does that work, are you f'd out of your money?
-p
Depends on the lender. Some will honor their last transactions. Most subprime lenders aren't really lending their own money anyway, and have "warehouse" lines of credit from larger investors: Lehman Bros, etc. So sometimes they line is simply closed and they can't get any money out. This especially awkward if there's a purchase involved because nobody (seller, lawyer, Realtors) gets paid until there's a new lender lined up, which usually means a few weeks' delay. And in some cases, there's simply no alternative because of the nature of the buyer (being subprime and all).
atari2600
03-06-07, 01:18 PM
can someone explain what it all means?
what are subprime lenders? are they going bankrupt? what does that mean in terms of the loans?
Deftones
03-06-07, 01:35 PM
New home permits in AZ are up for January and February. That's a good sign.
al_bundy
03-06-07, 01:44 PM
can someone explain what it all means?
what are subprime lenders? are they going bankrupt? what does that mean in terms of the loans?
anyone with a FICO of 680 or higher is considered prime. under 620 i believe is subprime.
in the last 2 years they were giving out huge loans with no documentation, 100% LTV or more, stated income, 2 weeks out of BK or foreclosure, you name. pretty much anyone with a pulse at rates only slightly higher than prime
all the loans were ARM, interest only, negative ammortization you name it since low income people can't really afford the prices of homes. now the rates are going up, prices are stable or down and foreclosures are skyrocketing.
in a lot of cases people who took on these mortgages haven't made a single payment.
al_bundy
03-06-07, 01:45 PM
New home permits in AZ are up for January and February. That's a good sign.
that will add to the 40,000 or so homes already on sale around phoenix
shifrbv
03-06-07, 04:38 PM
With all these people not paying the morgages I would expect house prices to come down a lot faster then they are.
Exactly. I look at home prices in my area all the time as I have read how much foreclosures have increased. But I don't see anything coming down. Prices are not rising, but they don't seem to be falling either. It looks like a completley stagnant market.
Almost like a store that has the same merchandise that doesn't sell but they don't reduce prices and in some cases even add to inventory at the existing prices. Somehow, they are able to still keep the doors open even though no one is buying. I don't understand it. I guess I don't believe the doom and gloom because there must be a heckuva lot of money out there to hold onto expensive merchandise like that.
Deftones
03-06-07, 04:59 PM
that will add to the 40,000 or so homes already on sale around phoenix
There's not that many. New home sales have increased b/c builders are getting smarter with incentives. And they are finally getting rid of most of the spec homes that people bailed on this past 6 months or so.
X
03-06-07, 05:09 PM
With all these people not paying the morgages I would expect house prices to come down a lot faster then they are.
Exactly. I look at home prices in my area all the time as I have read how much foreclosures have increased. But I don't see anything coming down. Prices are not rising, but they don't seem to be falling either. It looks like a completley stagnant market.
Almost like a store that has the same merchandise that doesn't sell but they don't reduce prices and in some cases even add to inventory at the existing prices. Somehow, they are able to still keep the doors open even though no one is buying. I don't understand it. I guess I don't believe the doom and gloom because there must be a heckuva lot of money out there to hold onto expensive merchandise like that.The economy is still doing very well and people for the large part don't have to sell their homes. When they get used to it being a certain value they don't want to take less for it and are inclined to hold onto it until they can get what they think it's worth. Even if it isn't at the moment.
It's taking longer to sell houses around here because buyers are waiting for sale prices that may never come and the sellers are still asking for top dollar. To get an idea of what current prices were I looked at some local houses a couple weeks ago in the $1.8 million dollar range and couldn't believe what you got for that (not in a good way). But then home prices have still appreciated around 2% over last year at this time.
Ranger
03-06-07, 05:09 PM
thoughts about cnnfn's article about bernanke's comments? article was about risks with mae and mac. had no idea their investment portfolio was around $1.4 trillion. do they really give out that many loans?
al_bundy
03-06-07, 05:44 PM
There's not that many. New home sales have increased b/c builders are getting smarter with incentives. And they are finally getting rid of most of the spec homes that people bailed on this past 6 months or so.
last i read at current sales rates phoenix is at around 3 years of inventory
the first wave of the $1.5 trillion or so in arm resets is due to come later this year. next year is still around $1 trillion for the last numbers i read.
i'm still waiting to see how people are going to handle a 50% increase in their mortgage payment. the subprime market didn't take it so well.
there was also a study done last year that estimates 2.2 million subprime resets over the next few years. Every year around 8 million homes are sold so this is a 12% increase in inventory just from these foreclosures. national inventory levels are at already a 9 nine month level on average.
al_bundy
03-06-07, 05:47 PM
With all these people not paying the morgages I would expect house prices to come down a lot faster then they are.
Exactly. I look at home prices in my area all the time as I have read how much foreclosures have increased. But I don't see anything coming down. Prices are not rising, but they don't seem to be falling either. It looks like a completley stagnant market.
Almost like a store that has the same merchandise that doesn't sell but they don't reduce prices and in some cases even add to inventory at the existing prices. Somehow, they are able to still keep the doors open even though no one is buying. I don't understand it. I guess I don't believe the doom and gloom because there must be a heckuva lot of money out there to hold onto expensive merchandise like that.
people have no patience today. last cycle the housing market topped out around 1990, went down until 1994 and stayed flat until 1997 or 1998.
this year the first wave of people will start seeing their mortgage increase up to 50% per month whether they know it or not. and the pool of buyers is shrinking as regulators start cracking down on some of the crazy financing and market forces are already starting to tighten credit standards as New Century and others go down the tubes
a lot of it is the listen to the experts mentality and a lot of them said this was the bottom. i've read news stories from the early 1990's which are almost word for word the same as today.
foreclosures are only now starting to go up. it takes close to a year to work through the process so later this year we'll start seeing the inventory increase as banks start to get rid of the houses. and they will probably sell for whatever they can get bringing down the comps for anyone else trying to sell. OC in california is also having a record number of people not paying property taxes
DVD Josh
03-06-07, 05:56 PM
Believe it or not, we paid asking for the house we just purchased (plus 10k closing credit). We did this because the previous three houses we were interested in all went under contract before we could even think about it. The one we bought had an extremely well-attended open house and did get some offers within 5k-10k of asking, so I don't feel that we overpaid.
Our agent said that the last 5-6 houses that she sold went for within 5-10k of asking, so there's been some tightening around here.
al_bundy
03-06-07, 06:16 PM
december was an uptick in the market, but january and february have seen it go lower. slower sales, more inventory, median price down, etc.
also depends on the local market
neiname
03-06-07, 06:33 PM
Nice homes in nice areas will sell. I'm relocating to Boston and found a house in a weekend (it was on market for 270 days) and sold my apartment in 3 days of listing it (without a broker).
al_bundy
03-06-07, 06:36 PM
Nice homes in nice areas will sell. I'm relocating to Boston and found a house in a weekend (it was on market for 270 days) and sold my apartment in 3 days of listing it (without a broker).
gotta love the nazi co-op boards
Jadzia
03-06-07, 06:49 PM
There was an interesting article in the Detroit News last week:
Can't sell, so owners give bank the homes (http://www.detnews.com/apps/pbcs.dll/article?AID=2007702270375)
People are just moving and giving the bank the keys rather than face foreclosure.
Ranger
03-06-07, 07:00 PM
Not going to read that article, but isn't that like forcing someone else to take your mortgage which isn't allowed?
If investors are buying flooded houses in New Orleans, I think any house can be sold. Some people just don't want to take the loss.
Lateralus
03-06-07, 07:20 PM
There was an interesting article in the Detroit News last week:
Can't sell, so owners give bank the homes (http://www.detnews.com/apps/pbcs.dll/article?AID=2007702270375)
People are just moving and giving the bank the keys rather than face foreclosure.
Well the Detroit area is probably the hardest hit area in the nation right now with the housing market and the automobile industry in the crapper.
Deftones
03-06-07, 09:51 PM
last i read at current sales rates phoenix is at around 3 years of inventory
the first wave of the $1.5 trillion or so in arm resets is due to come later this year. next year is still around $1 trillion for the last numbers i read.
i'm still waiting to see how people are going to handle a 50% increase in their mortgage payment. the subprime market didn't take it so well.
there was also a study done last year that estimates 2.2 million subprime resets over the next few years. Every year around 8 million homes are sold so this is a 12% increase in inventory just from these foreclosures. national inventory levels are at already a 9 nine month level on average.
Well, then we get an article from the local paper like this. Looks like it's not all doom and gloom. :shrug:
GM might be in trouble this year as well. Their subprime unit ResMae is having trouble and GM is late in filing their annual report to fix "accounting complexities"
kvrdave
03-07-07, 12:13 AM
Not going to read that article, but isn't that like forcing someone else to take your mortgage which isn't allowed?
I think it is basically like giving them the keys in lieu of foreclosure.
al_bundy
03-12-07, 11:09 AM
trading in 2nd largest subprime lender New Century has been halted after it announced that it's funding has been cut off and it dropped another 40% in pre-market trading this morning
desperate bag holders were seen trying to sell their shares at local flea markets, ebay and some have turned to using the stock certificates as wallpaper to increase the value of their homes
there are reports of several CEO's related to home building seen loading their cash onto private airplanes to be flown out of the country
a harried middle aged dentist broke through the security perimeter and asked about the process of returning the 5 houses he bought last year for a refund, and they just laughed
long term investors dedicated to dollar cost averaging have reportedly been still buying up shares with plans to be buried with them
a new trend has been talked about on the internet, instead of measuring their kids' growth people have started to track the equity they have built every month for 75% of their gross income that goes to housing
there is a rumor that a Connecticut based hedge fund with enormous exposure to the mortgage market has been approached to pay up on the credit default swaps it has purchased. the owner of the hedge fund reportedly gave the requester a bag full of New Century and GM stock certificates as payment. when threatened with a lawsuit against his personal assets, he reportedly spray painted LLC on his face and walked toward his Porsche Cayenne
Sonicflood
03-12-07, 01:41 PM
trading in 2nd largest subprime lender New Century has been halted after it announced that it's funding has been cut off and it dropped another 40% in pre-market trading this morning
desperate bag holders were seen trying to sell their shares at local flea markets, ebay and some have turned to using the stock certificates as wallpaper to increase the value of their homes
there are reports of several CEO's related to home building seen loading their cash onto private airplanes to be flown out of the country
a harried middle aged dentist broke through the security perimeter and asked about the process of returning the 5 houses he bought last year for a refund, and they just laughed
long term investors dedicated to dollar cost averaging have reportedly been still buying up shares with plans to be buried with them
a new trend has been talked about on the internet, instead of measuring their kids' growth people have started to track the equity they have built every month for 75% of their gross income that goes to housing
there is a rumor that a Connecticut based hedge fund with enormous exposure to the mortgage market has been approached to pay up on the credit default swaps it has purchased. the owner of the hedge fund reportedly gave the requester a bag full of New Century and GM stock certificates as payment. when threatened with a lawsuit against his personal assets, he reportedly spray painted LLC on his face and walked toward his Porsche Cayenne
Please post the source of this article.
VinVega
03-12-07, 01:52 PM
I don't think the real estate market has peaked. I need more proof. ;)
The Bus
03-12-07, 01:53 PM
Please post the source of this article.
Anything past the first part is intent at humor or rumor. New Century is definitely kaput.
The Times did a decent job doing an overview of all this:
NFI another subprime winner is paying a dividend that is currently higher than the price of the stock and it's still down over 10% today
New Century Gets Default Claims, Says It Lacks Cash (Update6)
By Yalman Onaran and Bradley Keoun
March 12 (Bloomberg) -- New Century Financial Corp., the nation's second-biggest subprime lender, said today it doesn't have the cash to pay creditors who are demanding their money now, increasing speculation that the company will go bankrupt.
Shares of the Irvine, California-based company, already down 90 percent in 2007, lost half their remaining value in pre-market trading. New Century said in a federal filing it doesn't have funds to give to lenders including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.
``They're one step closer to bankruptcy,'' said Bose George, an analyst at Keefe Bruyette & Woods in New York who rates the shares ``market perform.'' ``The only possibility for survival now is for someone, potentially an investment bank, to step in.'' Bose said a rescuer might provide more money in return for a large equity stake.
New Century may be insolvent because too many of its own customers -- most of whom have poor credit histories or heavy debt burdens -- aren't repaying their loans. Bad U.S. subprime mortgages are at a seven-year high, forcing more than two dozen lenders to close or sell operations. Their woes may contribute to more than 1.5 million Americans losing their homes and 100,000 people losing their jobs, according to real estate executives, economists, analysts and a Federal Reserve governor.
The New York Stock Exchange said in a statement it halted trading of New Century this morning while it decides whether to keep listing the company's securities in light of the liquidity problems. The shares hadn't opened as of 12:30 p.m.
The company's shares had fallen as low as $1.36 in pre- market trading. Shares of New Century fell on Friday to $3.21, the lowest in eight years.
Ripple Effects
Financial stocks also could extend their declines on concerns about rising mortgage defaults. Rival lenders including Fremont General Corp., Accredited Home Lenders Holding Co., and NovaStar Financial Inc. have shed more than half their value this year, and Countrywide Financial Corp., the nation's biggest mortgage company, has tumbled 17 percent.
Accredited fell 22 percent today, Fremont lost 12 percent and NovaStar 13 percent. Countrywide declined 2.9 percent.
Analysts including Merrill Lynch & Co.'s Kenneth Bruce predicted last week New Century will go bankrupt. New Century has used up cash as rising default rates forced it to buy back loans it sold to investors after borrowers didn't make their payments. The company said last week it's in talks with lenders and potential partners about refinancing or ``other alternatives.''
`No Assurance'
New Century's financing agreements have so-called cross- default provisions that trigger accelerated payments. Should all of its creditors force it to repurchase their loans, the total obligation would be about $8.4 billion, New Century said today.
Talks with lenders are continuing, and it can give ``no assurance'' that efforts to refinance the debt will succeed, the company said.
New Century has received about $975 million of financing from Morgan Stanley. Part of the money from the New York-based securities firm was used to pay Citigroup Inc. about $717 million on March 8, after Citigroup demanded repurchase of its loans, New Century said in today's filing.
Subprime loans, a term applied to some of the riskiest home mortgages, are made to borrowers unable to qualify under traditional, more stringent criteria. The loans often carry interest rates 2 to 3 percentage points higher than regular mortgages and sometimes have low initial ``teaser'' rates that adjust higher in later years. Some lenders also lowered their standards last year to bolster revenue because slumping home sales had hurt demand.
Bad Loans
The combination made the loans more prone to default, with delinquencies at more than 12 percent in the third quarter, according to the Mortgage Bankers Association. The Washington- based trade group is scheduled to release updated numbers for the fourth quarter tomorrow.
OceanFirst Financial Corp., the holding company for OceanFirst Bank, said today it will revise 2006 earnings because buyers of some of its subprime loans are forcing the company to take them back. Borrowers of the loans -- which the bank offered starting last year through the Columbia Home Loans unit -- are already defaulting, the Toms River, New Jersey-based lender said. The loans offered to cover 100 percent of a home's value.
Countrywide
Countrywide said late payments on home loans that it manages for others held steady last month. Loans at least 30 days past due remained at 4.71 percent of total loans serviced, the same as in January, the Calabasas, California-based company disclosed in monthly data released on its Web site. A year earlier, 4.29 percent of those loans were late.
Jim Shanahan, a senior analyst at Wachovia Capital Markets, cut his rating today on Countrywide to ``underperform'' from ``market perform.''
``While the origination and sale of subprime mortgages represents only a small part of the Countrywide story, we are more concerned that the weakness has spread to other sectors of the residential mortgage market,'' Shanahan wrote.
To contact the reporter on this story: Yalman Onaran in New York at yonaran@bloomberg.net ; Bradley Keoun in New York at bkeoun@bloomberg.net .
Last Updated: March 12, 2007 12:43 EDT
Sonicflood
03-12-07, 04:53 PM
I was wondering where the wallpaper and loading up cash in airplanes statements came from. That seemed to be out of left field as there was no ;) or other indication that it was a joke.
New Century is toast.
I do a lot of REO (bank owned) foreclosure sales for Accredited and Countrywide. Each have taken a big hit. I believe that they'll both survive it though. It's going to get a lot worse before it gets better. We'll be seeing many other sub prime lenders bite the dust in the upcoming months.
Countrywide is probably the strongest and should make it. Normally, I provide a market analysis every month for each of the REO properties, I'm now providing weekly updates as they are nervous and need to get the properties off the books NOW!
al_bundy
03-12-07, 07:18 PM
countrywide just laid off most of their subprime division
http://ml-implode.com/
still waiting to see who owns the derivatives that back these mortgages since Warren Buffet didn't want to touch them
Sonicflood
03-12-07, 07:58 PM
countrywide just laid off most of their subprime division
http://ml-implode.com/
still waiting to see who owns the derivatives that back these mortgages since Warren Buffet didn't want to touch them
Thanks for that link. I've bookmarked it.
I knew that Ocwen would make the list (ailing). They have been terrible at paying monthly reimbursements to agents & I've shut them off. They are one of the most difficult companies to deal with from my end.
al_bundy
03-12-07, 08:33 PM
i heard they mentioned that site on cnbc last week, so now you can call it legit
The Bus
03-12-07, 09:05 PM
Spreads on rates for subprime places seem like they have plummetted over the past couple of years. I know that as a whole, the world has been chasing riskier and riskier assets recently (on and off over the past 5 years) so this might be a result of that.
Checking right now, through one of HSBC's subprime divisions, you can get 30-year fixed rates in the low 6s for credit profiles that (potentially) would be unpalatable to any lender following Fannie Mae or Freddie Mac guidelines. In some cases, on and off over the past couple of years, you could actually do better. More risk for less of a return. Doesn't make sense. Ten years ago the spreads weren't that thin.
al: It was mentioned on the Today show as well.
Lateralus
03-12-07, 09:11 PM
I'm glad these bastards are going under! They allowed people to purchase houses that they could not afford and because of that home prices soared past what most familes can afford. It seems to me this was done on purpose just to raise the value of real estate.
shifrbv
03-12-07, 09:19 PM
It seems to me this was done on purpose just to raise the value of real estate
Not sure, but I've heard that it was the only way for the boomers to retire. It's also very good for government and alot of other industries. It seems everyone but purchasers benefits.
The Bus
03-12-07, 09:40 PM
I'm glad these bastards are going under! They allowed people to purchase houses that they could not afford and because of that home prices soared past what most familes can afford. It seems to me this was done on purpose just to raise the value of real estate.
I'm not going to deny that there are unscrupulous people in real estate. But this always strikes me as a surprise when people say they are buying homes they can't afford. A payment is a payment. If you're paying $800/m in rent and now you're paying $1500/m, some little light should come on in your head saying that this is way beyond what you're paying now. And if that's your limit, and you don't expect your wages to significantly increase in the future, you're taking a risk by doing anything except taking a 30-year fixed, fully amortizing rate.
I agree with you on some level. Even if only 5% of buyers are clueless about what they can afford, or are being misled by someone in the transaction, or expect continuos 10%+ appreciation, they're going to crazy when bidding for houses: a $150,000 house now goes for $165,000, a $400,000 house goes for $450,000, a $700,000 house goes for $1.1 million.
You have just a couple of transactions like that, and house prices cross some invisible threshold where now sellers of the $700,000 house feel OK with listing something at $850,000 just because maybe the same idiot who bought the $1.1 million house has a cousin who wants to move into the rapidly valuating area.
But that's an oversimplification and the truth is, at some point the buyers who are willing to pay $2500/month for a 2-bedroom townhouse are going to disappear.
Things are somewhat calm over here with only a handful of places advertising those flex-option, negative amortization loans (that Quicken Loans is so proud of). I have a client with a condo in North Palm Beach and he tells me he sees ads for places where there's no payments for X months, like it's furniture. He told me this about a year and a half ago and look where the NPB market is now.
My hope continues to be that any correction is in real, not nominal prices (as a national average). Home prices continue to slowly ebb up but they're outpaced by real wage increases.
As of a year ago, my home had appreciated about 10% on average since I bought it. As of this year, the price has only slightly budged and now the yearly appreciation is about 7%. If the price doesn't move between now and next year, appreciation goes down to 5%, right at or below national, historical averages.
It doesn't take a huge 25% drop in prices for things to correct themselves. One or two or three slow years and we're back at reasonable levels.
al_bundy
03-12-07, 09:50 PM
2-3 years ago everyone planned on refinancing or selling their way out of an unaffordable home
the big investment banks that gave New Century and other subprime lenders report earning starting tomorrow. Cramer had the schedule last week, but i forgot it. GM is scheduled to finally release it's 2006 full year numbers on Friday including the effects of a $1 billion subprime write off.
market was up today, but on extremely light volume. This friday is supposed to be quadruple witching on 4 different types of options. interesting week for stocks
BigDaddy
03-13-07, 12:30 PM
Stocks retreated Tuesday as investors grew more concerned that troubles for subprime lenders and weaker-than-expected retail sales signaled trouble for the economy.
Investors fled the already weakened stocks of subprime mortgage lenders as the sector's troubles spread. The New York Stock Exchange said shortly before the opening bell it would immediately suspend trading in shares of New Century Financial Corp. and move to delist the stock. The lender, which saw trading in its shares halted throughout Monday's session, on Tuesday disclosed more details on the raft of financial hurdles it faces.
Word from Accredited Home Lenders Holding Co. that it is grappling with a liquidity shortfall confirmed concerns that the sector's troubles are widespread. Without sufficient cash, the company cannot retain or sell the loans it originates.
In addition to subprime mortgage lenders, who make loans to people with poor credit, the market was worried about retailers, which the Commerce Department said eked out a meager 0.1 percent rise in sales last month.
"I think a big question mark on this is how much of this is weather-related," said Rob Lutts, chief investment officer at Cabot Money Management. "We had two or three days during the month which knocked out activity in a very significant matter ... I think it is causing a little bit of alarm short-term."
That alarm overshadowed a profit report from Goldman Sachs Group Inc. that came in well above Wall Street's forecast.
In late morning trading, the Dow Jones industrial average fell 40.45, or 0.33 percent, to 12,278.17.
Broader stock indicators also fell. The Standard & Poor's 500 index fell 3.93, or 0.28 percent, to 1,402.67, and the Nasdaq composite index slid 9.33, or 0.39 percent, to 2,392.96.
The worries surrounding subprime lenders and sluggish retail sales drove up bond prices. The yield on the benchmark 10-year Treasury note fell to 4.51 percent from 4.56 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose 92 cents to $59.83 per barrel on the New York Mercantile Exchange.
Tuesday's economic data didn't offer much support for bullish investors. The Commerce Department said sales at U.S. retailers rose 0.1 percent in February as wintry weather in much of the country kept shoppers away from stores. Investors had expected an increase of 0.3 percent from January.
Business inventories of unsold goods increased 0.2 percent in January as sales fell following the holidays. The increase was in line with expectations.
In corporate news, New Century said Tuesday that regulators subpoenaed documents under inquiries into accounting errors that inflated the value of the company's loan portfolio. The Irvine, Calif., company said the Securities and Exchange Commission and the U.S. Attorney's Office for the Central District of California began the investigations two weeks ago.
Accredited Home shares plunged $6.02, or 52.8 percent, to $5.38 after it disclosed its liquidity troubles.
Investors may pay attention to a report due later Tuesday from the Mortgage Bankers Association on mortgage delinquencies and foreclosures for the final quarter of 2006.
Investors trying to determine the breadth of the problems in the subprime sector pounced on comments from Goldman Sachs. The investment bank said strength remained in mortgages and credit products during the quarter and that while the subprime sector showed "significant weakness," the broader credit environment "remained strong." Goldman Sachs rose $4.39, or 2.2 percent, to $206.99 after posting a best-ever first-quarter profit amid strong revenue from trading and investment banking.
In other corporate news, Jo-Ann Stores Inc. jumped $3.67, or 16 percent, to $26.55 after the nation's largest fabric retailer issued a stronger-than-expected profit forecast. The stock skated past a previous 52-week high of $26.14.
Other retailers, however, fell moderately following the Commerce Department's retail sales data. Federated Department Stores Inc., parent of Macy's and Bloomingdale's, fell 19 cents to $44.75; Wal-Mart Stores Inc. slid 48 cents to $46.78; and Target Corp. fell $1.01 to $46.78.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to 445.16 million shares.
The Russell 2000 index of smaller companies fell 4.30, or 0.54 percent, to 784.70.
Overseas, Japan's Nikkei stock average fell 0.66 percent. In afternoon trading, Britain's FTSE 100 fell 0.53 percent, Germany's DAX index fell 0.50 percent, and France's CAC-40 fell 0.59 percent.
stellar numbers from Goldman Sachs. i listened to parts of the call and it seemed like they were avoiding questions on subprime risk.
stock is tanking, along with Morgan Stanley and a bunch of other banks
Aphex Twin
03-13-07, 01:57 PM
My freng is a branch manager at a Countrywide Full Spectrum Lending location. Do you think he'll get the axe eventually too? Will they transfer him to another function?
Lee Harvey Oswald
03-13-07, 07:18 PM
Checking right now, through one of HSBC's subprime divisions, you can get 30-year fixed rates in the low 6s for credit profiles that (potentially) would be unpalatable to any lender following Fannie Mae or Freddie Mac guidelines. In some cases, on and off over the past couple of years, you could actually do better. More risk for less of a return. Doesn't make sense. Ten years ago the spreads weren't that thin.
Generally speaking, are interest rates negotiable with lenders? According to "mortgages for dummies" they are. I'm going to give it a shot as I'm looking for preapproval.
The Bus
03-13-07, 08:21 PM
Generally speaking, are interest rates negotiable with lenders? According to "mortgages for dummies" they are. I'm going to give it a shot as I'm looking for preapproval.
They are, to a certain extent, with everyone. Regardless of who you're talking to, whether it's a mortgage broker, a mortgage banker, someone in a retail location, etc. there's always some "give" room.
The problem is, there's a small group of folks that choose to advertise and/or intentionally give misleading information. One outfit around here consistently advertises a negative-amortization "Option ARM" loan simply as "fixed". So if you are talking to a legitimate, reputable place and want them to match something that doesn't exist, that's not going to happen.
What you should be watching out for is the fact that rates change daily, and we're in a time period where they fluctuate more than normal: in the past month we've had 7 days with big swings in mortgage backed securities. If rates have had a good day, or a good week, it's worthwhile to ask the lender if they can revisit the lock. Many do.
I usually tell people to always ask for the best offer and then choose who they want to go with based on that.
Lee Harvey Oswald
03-13-07, 08:36 PM
They are, to a certain extent, with everyone. Regardless of who you're talking to, whether it's a mortgage broker, a mortgage banker, someone in a retail location, etc. there's always some "give" room.
The problem is, there's a small group of folks that choose to advertise and/or intentionally give misleading information. One outfit around here consistently advertises a negative-amortization "Option ARM" loan simply as "fixed". So if you are talking to a legitimate, reputable place and want them to match something that doesn't exist, that's not going to happen.
What you should be watching out for is the fact that rates change daily, and we're in a time period where they fluctuate more than normal: in the past month we've had 7 days with big swings in mortgage backed securities. If rates have had a good day, or a good week, it's worthwhile to ask the lender if they can revisit the lock. Many do.
I usually tell people to always ask for the best offer and then choose who they want to go with based on that.
I'm going to go with a conventional 30 yr mtg. Almost every quote so far has been at 6.25 with one at 6.1.
In the book I referred to, it says to ask for them to drop the rate 1% lower and one point lower. I'll give it a shot. The worse they can say is no. I'm going to go with a local lender.
DVD Polizei
03-13-07, 08:53 PM
A friend of mine's property just got re-appraised $110,000 lower. Putting it into perspective, the property originally sold for about $350,000.
I don't see how people didn't think sub-prime loans would all pan out and everyone would pay them off.
The Bus
03-13-07, 09:04 PM
I'm going to go with a conventional 30 yr mtg. Almost every quote so far has been at 6.25 with one at 6.1.
In the book I referred to, it says to ask for them to drop the rate 1% lower and one point lower. I'll give it a shot. The worse they can say is no. I'm going to go with a local lender.
The 1 point lower is much more likely as 1% lower since 1 point translates to a lower rate of 0.25% to 0.50%.
The thing is, if you're getting a competitive rate, asking to drop it 1 point would mean that most of the profit would be wiped out and they generally won't do that. If you're getting bilked, dropping a point might not change anything, you'll just get bilked less. It's hard to generalize with these things because every place really is different. What is not different is the market. No bank out there can magically give you a 5.25% 30-year fixed no points loan. It doesn't exist.
You can always email me if you want. I can't do anything in Illinois anyway but I can let you know if something is fair. And unlike kvr dave, I won't demand the head of your first born pup. ;)
al_bundy
03-13-07, 09:58 PM
A friend of mine's property just got re-appraised $110,000 lower. Putting it into perspective, the property originally sold for about $350,000.
I don't see how people didn't think sub-prime loans would all pan out and everyone would pay them off.
people were going to continually refi or sell to buyers who would only be able to afford the home via an adjustable loan who would then sell before their adjustment and so on
Sonicflood
03-13-07, 10:38 PM
I'm glad these bastards are going under! They allowed people to purchase houses that they could not afford and because of that home prices soared past what most familes can afford. It seems to me this was done on purpose just to raise the value of real estate.
Keep in mind, that they need appraisals to substantiate, so the blame is not soley that of the lenders! Appraisers frequently ask "can I get a copy of the purchase agreement?" Gee... I wonder why?
If they do not know what the purchase price is, then they have to provide a non biased opinion of value! The "puff & fluff" days are all but over. In the past, some appraisers might "puff" up an appraisal and this would result in an overinflated (fluffed) sale. This sale then became a comparable for the next sale. This cycle continued and drove percieved values up.
Now, appraisers are leaning more towards conservative as they don't want to have their asses hung out to dry! I perform valuations for banks as a 2nd opinion and frequently find out that an appraiser used comps that were unsuitable. I never have access to a loan amount or details of the purchase, so my valuations are based on true market values, not a figure that someone "needs".
Buy: