WSJ: Gentle Landing Hopes Dead
From the California Association of Realtors:
Home sales decreased 38.9 percent in September in California compared with the same period a year ago, while the median price of an existing home fell 4.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today...The September 2007 median price fell 9.9 percent compared with August’s $588,970 median priceFrom the Sacramento Business Journal:
...
"While it is typical for the median price to dip seasonally as we move from August to September, this decline -- which was both the largest month-to-month percentage decline on record and the first year-to-year decline in more than 10 years -- was mainly the result of the credit or liquidity crunch, which also drove sales below the 300,000 mark,” said C.A.R. President Colleen Badagliacco.
In Sacramento, the median price dropped more than 11 percent to $325,550 compared to $369,400 September 2006. The number of sales matched the statewide decline of 38.9 percent.The CAR median for Sacramento has declined 17.5% since peaking in August 2005.
DQNews data for California counties and cities is available here and archived here. Compare to other price measurements here.
From the Wall Street Journal:
Some forecasters now warn that home prices are unlikely to start rising in most of the country before 2009 or 2010. A year ago, many home builders and lenders still thought that the housing boom -- which more than doubled prices in some areas during the first half of this decade -- would end with a gentle landing. Now those hopes are dead.Chart: Where Housing is Headed
...
In Orlando, the supply of single-family homes and condos is enough to last 28 months. That compares with about 24 months in the Detroit metro area; 20 months in Tampa, Fla.; 15 in Sacramento, Calif.; 13 in the Northern Virginia suburbs of Washington, D.C.; and 11 in the Atlanta area, according to Realtors and consultants. Even in some of the nation's strongest markets, such as Seattle and Portland, Ore., supply is rising fast. In the Portland area, for instance, the supply is enough to last 8.6 months, up from 4.5 months a year ago.
50 comments:
Well at least we are well past the denial phase of the dying housing market and have moved on the anger and in some cases bargaining.
It's the credit crunch's fault now...
Sure the credit crunch does take people out of the market. Many people could only qualify on sub prime neg am loans and now they won't be able to.
But it completely ignores the spec building that was done. Most of the investors are gone (or wishing they were) and there just aren't buyers at the current prices.
The job salaries just don't cut it. There are plenty of jobs at Wal-Mart, McDonalds, and Starbucks but you can't buy a $400k home on those wages (not any more at least).
Where's little Jimmy Castro? Thought he said something about a bottom around this time? I'm seeing a black hole. LOL
Sure the credit crunch does take people out of the market. Many people could only qualify on sub prime neg am loans and now they won't be able to.
I'll likely repeat this story a few times, but I just applied for my loan a couple of weeks ago. OVER THE PHONE, I applied and was approved for a $400,000 loan...on STATED INCOME.
I should also mention that my FICO is below 700.
My credit report is clean and I don't have any debts, but still, they didn't even verify how much I currently have in my accounts.
My rate is 6.375%.
I'm only putting 10% down. It amazes me that I was able to get a loan so easily with ZERO documentation. They didn't even ask for a bank statement - they asked for a utility bill to verify that I live at the address I claimed.
To take it a step further, the lender never even checked a photo ID (the title company did when I went to sign all the documents).
I'm a fairly solid risk for a lender, but it shocks me to see that the so-called 'tightening of qualifying standards' is anything but.
Even though I'm glad I got the loan, the fact that it was so easy for someone to walk in and get money is cause for concern.
So, some of the big fires down in SoCal were deliberately started by arsonists......Mmmmmm, Now who would be slimy enough to do such a thing....Flippers? Specuvestors?
Just a thought
One of the added negatives of a boom is that builders get used to building junk and selling it easily. Any house built is quickly snapped up regardless of plan and location. I am amazed by some of the house plans and why someone would choose to live there.
When the bust happens, they've been in the mode of producing junk for so long they don't even try to assess what the market really wants. Due to inertia they continue building as they have while buyers sit on the sidelines because there is no financial pressure to buy (they can't be priced out anymore) and there's nothing about houses that "feel right" anymore that makes them want to jump in.
"...builders get used to building junk and selling it easily."
no truer words have spoken about the stucco slum that has been created around Sacramento
When the bust happens, they've been in the mode of producing junk for so long they don't even try to assess what the market really wants.
When I look at these new developments in Rocklin/Lincoln, I cannot help but wonder why they aren't putting these homes on 1/4- to 1/2-acre lots.
Very poor planning.
no truer words have spoken about the stucco slum that has been created around Sacramento
I'm new to the area and hear nothing but negatives about Elk Grove. What's the deal there?
Agent Bubble can you help?
1 How many active listings are there in Elk Grove 95757?
2 How many preforecloures and REO's (not yet included in the inventory)?
3 How many houses would sell each month in this credit strained environment?
The big question:
How many months of inventory is there in Elk Grove 95757 (AKA Bubble Central - brought to you by Jet Plane Sid and his buddies).
You could also use North Natomas GhettoMas as a test case.
SacramentoCrash said...
Agent Bubble can you help?
1 How many active listings are there in Elk Grove 95757?
396 in 95757
2 How many preforecloures and REO's (not yet included in the inventory)?
I only have access to active MLS listings. But there are 228 short sales and REOs listed in MLS (58%).
3 How many houses would sell each month in this credit strained environment?
In the last 30 days, there were 22 sales in 95757.
The big question:
How many months of inventory is there in Elk Grove 95757 (AKA Bubble Central - brought to you by Jet Plane Sid and his buddies).
396/22 = 18 months of inventory.
Not arguing against any of the above - just watch a few things...
Definately the credit crunch in August put a dagger in a lot of stuff. You could blame everything up to there on speculators, fraud, etc. But August was purely Wall Street - the market shining the light on poor financial modeling by our supposed brightest.
A positive on Elk Grove, one of the most affordable communities in the region, built a lot of great schools, community pools, etc., lots of kids.
On the 396/22 inventory in 95757. The 22 sales is extrordinarly low, when the prices stabilize, you could see 2-4 times that sales volume easily.
"When I look at these new developments in Rocklin/Lincoln, I cannot help but wonder why they aren't putting these homes on 1/4- to 1/2-acre lots. "
To maximize profit, of course. They'll do it as long as people are foolish enough (my opinion) to buy them.
"The 22 sales is extrordinarly low, when the prices stabilize, you could see 2-4 times that sales volume easily."
What was the normal volume prior to the bubble?
If the 22 sales are close to the normal volume, this may be as good as it gets.
And these sales may not count sales to 'investors' that will dump their house back into the market (either as sale or rental) sometime soon.
Thank you for you help agentbubble.
Now my addition to the inventory is what is going to make the whole thing look beastly.
There are 408 preforeclosures per RealtyTrac.com (180 more than in MLS). The 180 homeowners are either in denial or ......
Add the 180 to the dogpile and this means that there are roughly 576 homes that are either for sale or will be for sale in the near future in "The 95757".
576/22 = 26 months of inventory.
Good thing Elk Grove 95757 doesn't show up in the WSJ but that zip code has got to be up there with Stockton in terms of problems.
What is it going to take to clean out the detritus left by the "jet plane"?
Typo alert sb Thank you for your help agentbubble.
Crash,
I've seen homes in Davis and Woodland go straight to foreclosure without even trying to sell. They are underwater that badly and they know it. So they spend the time they have left saving, packing, and waiting for the sherriff to knock on the door.
sippn,
August showed a crack in the damn. The patch was applied, but it had nothing to with credit. It had to do with liquidity. Securitized assets which nobody wanted to buy, nor could sell. The money engine froze. The Treasury added some oil, money, and it got unstuck. The bad loans are still "hiding" in these CDOs, etc, and these bonds/etc have still not been downgraded. When this happens, the banks will let loose of the bad paper they're still holding onto, and the damn will burst. Homeowners are down at the bottom of the damn.
she... gets a 7/1 ARM $400K loan at 6.375%, with a moderate credit score, over the phone...doesn't sound like a credit crunch...unless you have bad credit and no cash.
Alba,
Then people will say:
"That Damn Damn! Damn!"
Chuck Ponzi
www.socalbubble.com
Chuck Chuck, and my bad language! Push him, and my language, over the...
Hey, you do know that the "soft landing was in the bag" right, then after that, this is a crash. But Gary watts was right, first there was a soft landing.
Cool.
Cow_tipping.
I got a 30-year fixed rate, but the fact that this was all approved and funded with nothing more than a quick credit check and having my address verified with a utility bill is cause for concern, because I'm not the only beneficiary of such lax treatment.
I forgot to add earlier that, although my credit report looks clean, I had some nastiness back in 2001-2002 and took a hit. I was then pretty deep in credit card debt until September 2005. I've been completely clean and debt-free for 2 years, but as you know, it takes a long time to repair a credit score.
The lender never even batted an eye or questioned anything at all. I found that odd, but a broker I spoke to last week stated that most lenders only care about seeing a 2-year clean credit history and no history of foreclosures. He said that he's still getting approvals for people with credit scores in the 480-500 range.
I should add that I'm pleased that the process was not problematic for me and that I secured a decent fixed rate. I don't mean to sound unappreciative, but I do want lenders to perform their due diligence in deciding what sort of loans to qualify people for.
Credit tightening is commng. if its easy now, you dont want to buy now. Its prudent to wait till interest rates are well above 7 and lenders require multiple visits to their office with documents that put the citizenship process to shame. That was what it was in 97 in sacramento when a 1700 sqft 2 story in elk grove was selling for 150K brand new.
Those days are comming, extra liquidity and SIV's are merely going to delay that.
Cool.
Cow_tipping.
I rent in 95757. There are home auctions going on, more Section 8 rentals happening, more investors losing their shirts, more "stealth" group homes, i.e., group homes with fewer than six occupants such that they don't have to be licensed. On the good side, the Franklin Reserve Neighborhood Association (which represents the area bounded by Elk Grove Blvd., Franklin Blvd, Bilby Road, and Bruceville Road) is becoming very active in sending "good neighbor" letters to absentee landlords informing them that their tenants are in violation of the nuisance code and in organizing clean up efforts for vacant homes (weeding, mowing lawns, etc.) If you Google Susan McDonald, the FRNA president, and Franklin Reserve Neighborhood Association, you will come across a mention of the Association in the Wall Street Journal Online.
That said, one gated community in the area, Dunmore's Monterey Estates I think, is on hold because Dunmore went belly up and was sold. I know that the recently completed DR Horton gated community is starting to have foreclosures in it.
It's really a toss up. The schools and parks are new and good in the Franklin Reserve Area, and my immediate neighbors are very neighborly and consciencious, but how it turns out down the line will depend in large part on the homeowners taking an active role in policing compliance with the nuisance ordinance (and Elk Grove has a very comprehensive nuisance ordinance) and building community. I think FRNA can get the job done, but I can't in good conscience tell someone to bet $400,000 on it right now. Well, make that $350,000. Anyone who pays retail in 95757 is an idiot.
If you really want to know what's going on in Elk Grove, you should join Elk Grove Online, elk-grove.com, and click on the community forum for the neighborhood you're interested in. The Franklin Reserve Neighborhood Association also has its own website, franklinreserve.org.
There are three, some might even say six zip codes in the Elk Grove area: 95757, 95758 and 95624. 95829 and parts of 95823 and 95828 are also in the Elk grove area and within Elk Grove school district but the zip codes belong to Sacramento. The city is known for having one of the nations best public school system and it is one of the fastest growing city. My guess is that the housing boom and recent marijuana busts (majority of them in 95757) factors into Elk Grove's problem. Realtytrac.com is currently showing 1513 properties are in pre-foreclosure and 1209 are already bank-owned in the city of Elk Grove and I believe that's just the 95757, 95758 and 95624 zip codes alone.
School test scores may not be only criteria for measuring the value of a school, or a school district, but they do tell a lot about the area, even if you don't have kids. One reason why a family with school-age children might (not) chose to live in Elk Grove.
http://api.cde.ca.gov/reports/API/APISearchName.asp?TheYear=&cTopic=API&cLevel=District&cName=&cCounty=&cTimeFrame=S
I'll likely repeat this story a few times, but I just applied for my loan a couple of weeks ago. OVER THE PHONE, I applied and was approved for a $400,000 loan...on STATED INCOME.
This is starting to sound realtorist, or someone else in the RE industry, eh Gwynster? Anyway, this only feeds our suspicion that there will be a false bottom to this crash. I mean if there are stupid brokers, buyers and investors still getting into RE while its in a freefall, and STILL over priced, it's obvious homes will still be overvalued with this false run up in easy credit, or stupid credit, which ever you prefer. So when your home falls 10% in the next 6 months, which it will, it will take out that 10% down payment of yours and you won't be able to refi, if needed, unless you can come up with the dinero. If you need to sell, you'll be upsidedown like a million others.
When I look at these new developments in Rocklin/Lincoln, I cannot help but wonder why they aren't putting these homes on 1/4- to 1/2-acre lots.
This isn't poor planning. Plenty of developments with those sized lots exist, but it will cost you about $150K extra. Or at least it used to when RE was actually worth something. Additionally, at least builders were trying to minimize costs to some extent, I mean they have all this inventory of homes at $450K and up on a lot that size of a peanut shell but the income levels in Placer Co can't sustain those monthly payments, unless you buy from Shew's (stupid) lender.
Reports Suggest Broader Losses From Mortgages
"Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up."
http://tinyurl.com/26y8z6
Buffett says mortgage ills might linger at least 2 more years
http://tinyurl.com/22xoyc
Hello All,
Firstly, I would like to acknowledge the foresight and armament this blog has given me in assessing the decline of the residential market in the Sacramento Region, among others. I have been lurking around your postings for some time, but have been reluctant to post due to my profession: I am a commercial real estate appriaser in a local foothill community. I am sure that I am not the only real estate professional on this site who sits on the fence and enjoys reading the information posted on here.
I have several close associates whom are residential appraisers, as well as some very close associations with major developers in the Sacramento, Sutter County, and Placer County markets - and all of the principals of these firms were the first to sell their mansion and spruce up their rental homes to move into in July/August of 2005.
Due to a number of circumstances, the advice of some collegues, and perhaps a stroke of divine intervention - I refrained from entering the residential market in 04-05, and am still sitting on the fence. I will be (when I decide to enter) a first time homebuyer. It was a burden to carry for a long time during the housing run up, at every conversation where someone brought up their appriciation in their home, and the benefits of homeownership - and I held my tongue on my apartment living situation. But today, I am very grateful to have not jumped the gun on this one.
Enough with the formalities, on with the gossip, eh? SO, I just got back from the latest appraisal insitute seminar in Lake Tahoe, and there were several heavy hitters from the residential industry there (developers and market analysts). General consensus was this:
Today thru Summer 2008: -8% to -12%
Summer 2008 thru spring 2009: bottom
2009-2011: Plateau
No increases, repeat no appreciation expected for the next three to five years. All of the major local players I have talked to have even more pointed predictions than that - and most predict no real appreciation until 2012-2013. This is a real mess.
Not to boost anyone elses recession fears, but if you go take a commercial broker out to lunch in Sacramento right now, they may just tell you about a growing vacancy rate, continued delivery of space that was in the pipeline during early 07', and a glut of office and retail product in the market currently. Industrial market has loosened up considerably as well. Cap rates have already risen a percent or more (depending on investment grade and property type) since the turn of 06', and I suspect this will continue. So, we will be back to the days of the 10% cap rate in no time at all?
This fallout from the residential market is affecting everything, and although I love what it is doing for my buying power, I am worried about a recession. For those of you who are civil servants, I salute you for making a worry free career choice in these troubled times. For the rest of us, I am not sure what to hope for. Personally, there is no denying that home prices are going to continue to drop another 6-10% over the next eight months. I would not mind seeing this, but for those of us who are able to get into the market now - I would like for the economy to still be strong enough for us to pay for those affordable mortgages.
These are just my opinions, I am not an RE shill. In fact, I hold contempt for any of those RE agents (and I know many) who could not manage to sock away 15% a year when they were making $30 a month (or more). NO pity for them or the builders who bought those lots for $30k per paper lot.
It has been a pleasure reading all of your comments, as there are several of you whom are very savy and educated in this residential predicament.
"Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up."
Well, duh!
I mean, home prices keep on going down, hence the value of their holdings will follow.
That's where I said everyone played stupid.
banker - 'yeah, I'll lend you that money. After all, if you can't make the payment, we'll sell it at a profit'
Of course, they never bothered to realize that the asset they thought was 'worth' $500K only had a value of $250K tops.
And when they see that asset be at $400k, they can't believe it will go lower.
This is starting to sound realtorist, or someone else in the RE industry...
Ah, if only you knew how much I hated my realtor...one of the shadiest characters I've ever met. That's an entire story in and of itself, though, and I'm already planning to launch a new website or blog about eliminating realtors from the home-buying process.
As an investor, I look at the highs, examine how that market was propped up, and then speculate on what a home should be priced at assuming a moderately conservative appreciation of 3% annually since 2000 (arbitrary selections) while at the same time trying to guess what's likely to happen to this area's economy and population in the next 10 years.
Personal factors affecting my decision to buy now rather than in a year when I could potentially save $40,000 (not accounting for the $24,000 I'd pay out in rent, of course):
1) Working from home, it's to my benefit to get settled into the place I intend to live for another several years - value $25,000
2) I hate moving, so better to do it now while most everything is still boxed up than in a year when I'm more settled into the rental - value $20,000
3) My goal was to purchase a home before 2008 - value $0
Other factors influencing my decision to purchase at this time:
1) Desire to stimulate local economy
2) Able to obtain financing very easily right now at what I consider to be a good rate (6.375%) and I'm not sure that option would be available to me in a year or whenever the market begins to recover
3) I'm a buy low/sell high guy, but admit that what I consider 'low' is based on having lived in overpriced SoCal for several years
Reasons why I should not buy right now:
1) Exercising a little more patience might result in more money in the bank as anyone can see the market is still in steady decline
2) The 'realtor' I signed with stands to earn a ridiculously large commission on my purchase, and has done (expletives deleted) to earn it. In truth, many people would cancel for that reason alone.
So when your home falls 10% in the next 6 months, which it will, it will take out that 10% down payment of yours and you won't be able to refi, if needed, unless you can come up with the dinero. If you need to sell, you'll be upsidedown like a million others.
A 10% loss would be a virtual wash for me, but I completely understand that's not the case for the majority of buyers out there.
20% is a different story.
I mean they have all this inventory of homes at $450K and up on a lot that size of a peanut shell but the income levels in Placer Co can't sustain those monthly payments, unless you buy from Shew's (stupid) lender.
I won't presume to know how much my neighbors are earning, but it's safe to say that most are not earning anywhere near what my SoCal neighbors brought home. And many of the folks in my town down there only had mortgages in the $250-300,000 range.
I lived in a 1200 sf 3bd/2ba down there and the rent was $2000/month. The 30-year-old home was for sale at an asking price over $600,000.
So, coming up here and getting over 3000 sf for $2400/month is a solid deal to me.
My worst-case scenario is having to move within 2-3 years and being unable to locate a buyer...and then being forced to rely upon the services of a realtor to get the property sold because I've already left the area. *sic*
Even though Twelve Bridges has a lot of homes either in foreclosure or about to be, we managed to select a street with all green lawns and only two 'For Sale' signs. :)
alba, the reason nobody wanted to buy the CDO's is that Wall Street modeled them without any downside assumptions - pure garbage. The assumed 2-4% appreciation annually always.
CommercialAG -
Funny you should mention all the empty commercial space. I was just driving Golden Foothill Parkway in EDH and it looks like the majority of the buildings have for lease signs. Many of these have been available for over a year. Even the new Safeway off Franscisco still has some empty storefronts. And of course they are building more retail by White Rock...Yikes. Not to mention all the building they are doing right off the freeway at Bidwell in Folsom (a new mall). There is no way the local demographics can support all this.
CommercialAG -- you are exactly the reason I keep reading the bubble blogs obsessively. Every so often, someone with inside info spills it.
BT, I ate my lunch yesterday outside the empty new shops across the parking lot from the new Safeway in EDH off Francisco, and I was thinking the same thing! There are also empty commercial spaces along EDH Blvd. near 50, and I suspect that the new shopping area down off White Rock Rd has a lot of vacancies, too.
And there are STILL plenty of other buildings in the pipeline for that area.
A lot of builders assumed that the homes being built were for real people, hence they are building for this phantom demand.
CommercialAG
excellent post... I'm going to print it out to remind myself of the reality of market for today
and the next couple of years..
thanks for posting it.
Comm,
Welcome to our world. I wish I had some advice on what to do when we get hit with the recession for you. My best friend left UCD in April and is still looking so I know it has to be worse then I think it is already.
I keep being told there is not enough commerical space in Davis. Davis is also getting ready to start arguing over the Cannery land use again (this will be fun!). We've had a rash of Buzzboxes grabbing and UCD has been gobbling them up since campus is hella crowded. Some depts and the research labs that can move off campus, have moved.
There is a RE fruitbat on another blog that is telling her clients do not worry about the market and price high because the REOs in the neighborhood don't count. This person is in FL.
This article is her justification
http://activerain.com/blogsview/249469/Using-REO-Sales-for
I think I know where this appraiser went wrong but I'd like some opinions from people who do this daily.
For us armchair RE hounds, this is just a little Friday morning fresh meat >; )
SMF,
I spoke with some of my data analysis folks and they said we're still too optimistic on the overbuilding. I'm trying to get them to give me some numbers I can share.
My coworker just had an offer accepted in Carsten Ranch in Whitney Oaks. The 2549 ft2 house by Grupe Homes was initially listed at 544K and they made an offer of 364K. It was accepted without a counter. That is a 33% lowball offer.
If I factor in a 33% reduction in the houses I am looking at, I would also buy today.
We're gettin' there guys!
"I spoke with some of my data analysis folks and they said we're still too optimistic on the overbuilding"
See if you can get some real figures. The inventory overhang is very hard to figure out. Last I read there were about 1 million excess homes in the US. And commercial follows residential.
Retail may be in real trouble. It's not only that stores opened every week over the last few years on the strength of sales that were dependent on home equity lines of credit. Proposition 13 also encourages cities to go for retail development, as the sales tax is much more profitable than property taxes.
SheWrestles said:
"A 10% loss would be a virtual wash for me, but I completely understand that's not the case for the majority of buyers out there.
20% is a different story."
You can expect prices to drop at least 20% more. We're only a little over 2 years out from the peak and we've already dropped 20%. Mortgage reset charts alone indicate that trouble will continue through 2011!! If we continue to drop around 10% a year, or pick up speed (as we currently appear to be doing), further drops of 20% are very easily guarunteed. I hope you're not betting otherwise.
Commercialag:
It's nice to read a more realistic opinion from inside the industry though I feel the bottom estimate you presented is still much too conservative. As mentioned above, resets alone will still be hitting the market through 2011 (see the credit suisse charts, among others), driving forclosures throughout. Prices cannot and will not remain flat while this is going on.
Regards.
SheWrestles
I agree with the above post. If you can take a 40% hit over the next 3 years, then survive another 5 years of 0% apprciations / depreciations, then you still need to stay put several more years to make up that 40% loss (which would take 65% appreciation, lets say 5% per year is another 10 years).
Now if you can take that 40% hit and it wont matter to you, and if you had to sell at a loss or give the home back to the bank and walk and still be ok, then go for it.
But your 10% down will be done in a year so you will not be able to refinance or sell (except short sale which still leaves you will nothing from the sale).
Waiting a year would save you at least $40-$60k and probably the same in 09. Or it could be that there are even greater drops in 08.
But if you absolutely have to buy, go for it. Just know what you are getting in for. The chances of just a 10% drop and then the following year hazing no plateau and start rising again is about 0% (can we go less than 0%)?
All you have to do is look at the wages for the area, the number of homes for sale, being build, being foreclosed, and the amount of loans resetting next year to see that buying now is a really bad decision.
I would only buy today if I got a huge discount or could buy for cash. Neither are likely to happen for me until 09.
By coincidence, Mish had a post yesterday arguing that a housing bottom would not occur until 2011-2012 on the basis of:
- Mortgage Rate Resets in Conjunction With a Consumer Led Recession
- Historical New Home Sales
- Historical Housing Starts
http://tinyurl.com/2nuhna
I feel this is pretty accurate. I've seen a lot of "bottom" speculation here and elsewhere, but usually without any basis.
Additionally you are paying $2k/month right? So you could rent the same place for what? $1,500.
So additionally you are losing the $6k per year you would save by renting + $5k in taxes + and additional mello roos or HOA you pay.
So in two years you could have saved an additions ~ $25k + you wont lose $80k (at least) in depreciation. That is a big chunk of change.
I dont know how much you make, but unless you are way up there on the pay scale, $50k/year is a lot.
Then factor in interest on the money you save + your down payment and the incentives to wait just keep adding up.
So you did assign some values on buying now, that is good. Also do the same for waiting and see what the difference is.
Also in 2 years there will still be tons (even more) homes to choose from, if you want new, the builders will be begging for your money.
"By coincidence, Mish had a post yesterday arguing that a housing bottom would not occur until 2011-2012 on the basis of:"
I'm gonna say this won't happen, mainly cause it would negatively effect my plans. Hey, thats about as thorough an analysis as paid experts give... lol
Actually I do think it will bottom faster cause the media and realtors cant hide the info as easily anymore. Once the banks really start getting rid of homes, I think we will have a quick drop to the bottom, then just stay there for several years.
"My coworker just had an offer accepted in Carsten Ranch in Whitney Oaks. The 2549 ft2 house by Grupe Homes was initially listed at 544K and they made an offer of 364K. It was accepted without a counter. That is a 33% lowball offer."
Wow..that's a nice discount. I have an idea, maybe we can create a place on this blog where people can list the low ball offers that got accepted. That would be very helpful for some of us (like me) that are kind of looking for good deals right now but want to have an idea of how much of a low ball offer to make.
Maybe the posting can show asking price, price offerred and accepted. Furthermore, details of house, location, development, new or resale. What do you say blogmaster? Can we do something like that here?
Hey guys!
Get this - We did NOT close yesterday, after all, and did not close today either.
The seller is now refusing to pay the full buyer's credit, so they're all going back and forth on that right now to see what they can work out.
A lot of he said/she said going on, but the title company told me that the bank selling the property is saying that their buyer's credit was for 'closing costs' only as opposed to 'total cash to close'. The title company told me first thing this morning that the seller wants me to bring another $4000 cash in to close.
My lender is aware of what's going on, the title company knows, and my realtor knows.
My checkbook is officially closed, and I could care less either way. I'll be fine if we get the house, but won't be at all sad if we lose it.
I told the realtor that they had until the end of business today to give me some resolution - to let me know whether the close is on Monday or Tuesday - because the clock is now ticking.
I've already had to cancel the movers, plus the utility hookups, and luckily, my landlord has not yet rented our current home.
It is not 5:30 and I haven't heard anything, so in another 30 minutes, I'm going to assume the deal is off. I'll give the title company a call in the morning to verify.
"Actually I do think it will bottom faster cause the media and realtors cant hide the info as easily anymore."
This would seem like a good enough reason, but as I mentioned, the market cannot remain flat and stable while massive resets (which lead to forclosres) are occuring, which they are scheduled to be through 2011. Therefore, a bottom will not occur until at least 2011.
Yea, unfortunately the market won't recover any time soon. As much as I want it to.
I think the biggest problem was all the spec buying and spec building to meet the spec demand.
If everyone who want to buy does and everyone else rents, if that happened tomorrow, I still thing you will have thousands of homes left over that nobody wants.
:(
I still think you will have thousands of homes left over that nobody wants.
Yep, and that's why I was shocked that the seller wants to quibble over $4000 and even MORE surprised that my realtor called me with the expectation that *I* might cover the shortfall. The realty company knew full well before they even dialed my number that I was done with the payouts.
Since the bank won't budge, then it's up to the agents to figure out who's going to eat the loss if they want to complete the sale.
Personally, if I were the realtor, I'd rather 'settle' for $11,000 on the deal instead of risking getting $0 from me, which is what will happen if this sale does not close.
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