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.

<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.

Hey X, you gave me a good idea of adding a commute calculator onto my website.

Thanks!

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.

Your puts have kicked in :grunt:

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.

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

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.

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

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.

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.

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.

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.

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

That's what I like. Headlines to headlines of headlines.

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

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.

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%.

doesnt texas have no income tax or something? that helps.

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.

$71,000 for a house in McAllen-Edinburg-Mission, Texas? That's a lot less than a lot of people's cars here!

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.

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.

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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.

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.

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?

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/article3/nyt_logo_sm.gif (http://www.nytimes.com/2006/02/17/business/17investors.html?_r=1&oref=google)

February 17, 2006

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.

That's the problem, though....how do you know you are buying in the middle of the boom instead of at the near begining?

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.

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.

: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

sudoku?

sudoku?


I think you are looking for kvrdave's son's middle name thread.

Flippers can suck it.

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

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.

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.

http://thevillageswestathuntington.com/hamilton.htm

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.

http://www.realtor.com/FindHome/HomeListing.asp?snum=5&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=900000&mxprice=1750000&js=off&pgnum=1&fid=so&stype=&mnsqft=&mls=xmls&areaid=3866&poe=realtor&ct=Melville&st=NY&sbint=&vtsort=&sorttype=&typ=1&typ=2&typ=4&x=70&y=6&sid=06344161246FC&snumxlid=1048113976&lnksrc=00002

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."

http://www.breitbart.com/news/2006/03/06/D8G69A980.html

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.

New Housing Starts: -7.8%
Building Permits: -5.5%,

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.

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.

Has anyone seen information on housing construction that excludes the hurricane areas? One would think that Rita and Katrina skewed the overall trend.

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

Has anyone seen information on housing construction that excludes the hurricane areas? One would think that Rita and Katrina skewed the overall trend.


http://www.census.gov/indicator/www/newresconst.pdf

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.

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.

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.

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.

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.

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.

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!

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

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.

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.

: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.

http://graphics8.nytimes.com/images/misc/nytlogo153x23.gif

Sales Slow for Homes New and Old (http://www.nytimes.com/2006/07/26/business/26home.html?ex=1154059200&en=688c6183850572a2&ei=5087%0A)

http://graphics8.nytimes.com/images/2006/07/26/business/26home.650.jpg

By JEREMY W. PETERS
Published: July 26, 2006

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.

slowdown and buyers market is nowhere near the same thing as a bubble bursting...

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.

My local news said something about home prices having dropped 16% here since this time last year.

Boston?

As far as I can tell, my house has gone up about 20% in the year since this thread was started.

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.

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.

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.

Stronger markets he named were Hoboken, Delaware, Colorado and Phoenix.
:banana:

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.

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.

[More... (http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2006-08-15T162047Z_01_N15391476_RTRIDST_0_ECONOMY-HOMES.XML)]



Market highlights:

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.

latest article on MSN

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/FaceItTheHousingBustIsHere.aspx

latest article on MSN

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.

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.

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

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.

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.

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.

listing and selling are two different things

there is a lot of stuff in NJ being sold at 20% off the original asking price

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.

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.

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.

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

Interesting charts for the 10 biggest home builders in the US:

http://www.investertech.com/tkchart/tkchart.asp?stkname=CTX,DHI,KBH,LEN,PHM,TOL,HOV,MDC,RYL,BZH&prt=0&wt=3

Interesting charts for the 10 biggest home builders in the US:

http://www.investertech.com/tkchart/tkchart.asp?stkname=CTX,DHI,KBH,LEN,PHM,TOL,HOV,MDC,RYL,BZH&prt=0&wt=3

That's just a copy of the same chart 10 times. :mad:

Interesting charts for the 10 biggest home builders in the US:

http://www.investertech.com/tkchart/tkchart.asp?stkname=CTX,DHI,KBH,LEN,PHM,TOL,HOV,MDC,RYL,BZH&prt=0&wt=3


Those charts do appear to be saying 'bubble burst', but maybe the big down swing means something else? ;)

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.

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?

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

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.

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.

Here is an interesting article:

http://biz.yahoo.com/special/pf092606_article1.html

Help! Home for Sale -- A Young Couple's Dilemma

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?

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

Real Estate 101: In a down market, sell your home first before buying a new one.

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.

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

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.

Couple all this with the inevitable fall of interest rates and you have a solid buyer's market.

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.

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.

but it got so bad that people began to expect these kinds of gains in some markets

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.

http://sfgate.com/c/pictures/2006/10/18/mn_sales.jpg

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.

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.

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.

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.

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

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.

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.

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.

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.

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