It's Only Going to Get Worse
 

The housing market.

Grim.

JP

I'm sure the pain will be felt everywhere, but luckily there are parts of the country largely unaffected by this kind of stuff. Housing values around here have stayed in the sane range and most realtors describe the current market as "normal".

We just sold our old house (in Alabama) for $60k more than we paid for it less than four years ago (and we had two offers to choose from) and buying a house here in TN required us to essentially pay a premium. No housing crash around here.

The top fell out of our local RE market (anything above $250k). The rest of the market has been largely unnaffected. A good friend of mine sold his house in three weeks--got the offer on Friday.

Then again, "exotic" around here was a 30-year fixed with 10% (*gasp*) down.

I used to get mad in my school (No, I can't complain)
The teachers that taught me weren't cool (No, I can't complain)
Holding me down, turning me round,
Filling me up with your rules

I've got to admit it's getting better,
A little better all the time (can't get no worse)
To admit it's getting better,
It's getting better since you've been mine.

Me used to be angry young man
Me hiding me head in the sand
You gave me the word I finally heard
I'm doing the best that I can.

To admit it's getting better,
A little better all the time
To admit it's getting better,
It's getting better since you've been mine.

Getting so much better all the time
It's getting better all the time
Better, better, better,
It's getting better all the time.
Better, better, better

I used to be cruel to my woman
I beat her and kept her apart from the things that she loved
Man I was mean but I'm changing my scene
And I'm doing the best that I can.

I admit it's getting better,
A little better all the time (can't get no worse)
Yes, I admit it's getting better,
It's getting better since you've been mine.

Getting so much better all the time
It's getting better all the time
Better, better, better,
It's getting better all the time.

Better, better, better,
Getting so much better all the time.

Yes. Yes it will.

Significantly worse.

Sorry but cannot join the party with you guys. Houses in my neighborhood have bottomed out and are now finally starting to come around. Its so nice to see the values heading back up for a change.

Course we were very early on taking the "dive bomber" attitude and losing money.

I dunno, Joe. I live pretty close to you and a foreclosure sign went up in a neighbor's yard about two weeks ago. That can't help the neighborhood values any. On my street there are a ton of for sale and for rent signs. I'm in no hurry to buy, as renting is so much cheaper at the moment.

Nope. Phx looks like it's bottomed out and poised to go higher! (lol).

http://www.housingbubblebust.com/OFH.../SouthWest.PNG

i'll have a clearer pic this fall.

High fuel $, credit cards over extended, high food prices, job markets flat, blue collar guys want to jail the illegals, and real estate taxes rising. This is a party in waiting. Cash may become king again.

If your credit score is close to 800 the banks call to ask if you need anything.

so far around here home sellers raised prices to last summer's #'s after dropping them for the fall and winter. Buyers think they're on acid.


my issue is inflation, a lousy Fed Reserve, and a worthless spineless Congress.

I am starting to believe the freefall is slowing, the panic lessening, and some sensibilities are entering the marketplace. Plenty of pain to go around, but the foreclosures around here are selling. So are starter homes. The builders have retooled and are building smaller sfr's and a larger proportion of multi-family.

The untold story in So Cal are the number of newly created first time buyers.

I'd like to see cities like Chicago, St. Louis, Nashville, and Minneapolis on that graph...

really? how so?

You are likely seeing what's known as a "dead cat bounce".

Here's the wiki on it - a lot of markets follow this pattern:

http://en.wikipedia.org/wiki/Dead_cat_bounce

http://www.housingbubblebust.com/OFH...hs/MidWest.PNG

Dead cat bounce, or at least slowdown in the decline, that's exactly what happened in So. Cal. in 91/92 (which was 2-3 years after the bubble peak in 1989).

Like is happening now, in 91/92 prices had declined quite a bit from their '89 peaks. Real estate agents were of course saying the decline was over, prices are way down, etc. etc.

Prices in So. Cal., however, continued a steady (but less steep) decline for another half decade, until 1997. Prices did not start a sustained increase until 1998.

It's the same situation now. Thinking that the Biggest Bubble in the History of the World (in the bubble areas through the US) can or has deflated in 2 years is just not realistic thinking.

No doubt, there have been some major declines already, I'd think that many, many houses in San Diego, Orange County, Riverside and LA have already gone down 25-30% in value, if not more. But they easily can (and will, IMO) go down 10, 15, 20, 25% over the next 3 years, then bounce along the bottom for a few more years, before there is any sustained increase.

I love the gloom and doom talk. There are great opportunities to pick up more real estate.

I've quit looking at commercial properties for now, and am going to pick up a few more houses to use as rentals.

Lots of inventory, lots of motivated sellers, lots of bankers trying to lend money. What's not to like?

"Newly created..." I suppose was poor choice of words. I was referring to anecdotal stories of business associates and friends who have family members who are, for the first time, are able to purchase a home.

I do like to talk with people - esp. the day-to-day average guys I come in contact with. Like the truck driver who delivers to our office - he knows he has my ear once in a while, and was explaining to me how he was now able to buy in the neighborhood he wanted to raise his kids/school them in. Purely anecdotal I know. Also, FWIW, I'm told 80% of the foreclosure homes going to auction on Saturdays around here (local convention centers, hotels are all hosting them) are selling. There's apparently no lack of buyers.

That said, I'd hate to have to move if I'd purchased in the last 24 months!

Well I guess its all local, because house are moving pretty well in our neighborhood (Laurelhurst area of Seattle). Folks across the street just sold their house in less than 10 days. They paid $502k 5 years ago, and sold it for $800. 2 houses within a block moved in less than a month.

Rick,

We have one house in my area that is for sale and its a "short sale" because a couple of 25 year old kids bought it at the wrong time and now the ARM has flopped and they cannot afford it. Not one foreclosure in this area so far. Where you live up in Anthem there were a lot of speculators while where I am everyone who owns the houses also live here.

THE,

I am not talking about the entire city of 7 million people you idjuit! :) I live in a pretty nice area North of town, that is right on the edge of the desert. We have always been more "desireable" for that reason and this is what we are watching around here. The nicer areas have started to rebound while the rest of the city is still hurting.

Suppose you guys are going to tell me that Hard Drive is living in a depressed area as well? My house values have just leveled off and will be heading upwards shortly. Been watching them for a while. I am still over $100k above what I paid for the house 7 years ago so its been a good investment.

Ok guys, if you really believe that its this bad and going to be staying this way, how do you feel about tax liens on property? This is where someone is behind on paying the taxes and you pick up their taxes to be put first in line on the property if they default.

Started a new thread on the subject here: http://forums.pelicanparts.com/off-topic-discussions/412637-anyone-here-ever-buy-tax-liens.html

Well the "sky is (still) falling" propaganda all over the media certainly isn't helping things. As a whole, it probably will continue to stagnate, but I wouldn't bet on things getting "significantly worse." I guess that is open to interpretation.

I am in the biz (Sotheby's International) and from my perspective, it hugely market/area (macro/micro) dependant. Some will continue to fall, some are simply maintaining value, and some are back to a positive equity position and steadily increasing, with the latter status gaining ground within certain price points and/or geographic pockets.

The strong majority of the areas I work in (North Phoenix, Scottsdale, Paradise Valley, Fountain Hills, etc.) have seen the bottom a few months back IMO, and things are moving up slowly but surely. But yes, Phoenix got hammered pretty good, and the mid-to-lower priced homes/neighborhoods will be the last to see any positive change IMO. Basically, Phoenix is at 2005 prices, minus 20%. Whereas Scottsdale is at about 2005 levels, minus 5%, but back on track.

Here is a graph showing homes under contract for the greater NE Phoenix/Scottsdale area since 12/07:

http://forums.pelicanparts.com/uploa...1212440703.jpg

Obviously not huge gains, but at least things are trending upwards again.
I think people with means are realizing that the window for great deals is slowly closing, as home prices and interest rates are on the rise.
SmileWavy

Anecodotal from LV..The foreclosed house next door sold to a local of 45 years in LV for 345K . Top price paid for tha model house in the hood was 545K back in summer of 04. This paticular house was sold for $480K in early 06, which was below market. The org owners wanted out as they had another house in Summerland.

New owner told me that there are a lot of investors coming over from LA to buy foreclosed homes here because they are considered to be cheap now.

As one can see the LV market is down about 40% from its peak. Almost 30% since 06.

I have NO GUESS as to where the LV market is headed...Time will tell.

Eric,

Thanks for the post and thats exactly what we are seeing in my area right now.

Am not so much concerned with how fast its going up, as long as it starts going up!

Joe

Not to nitpick, but that graph is backwards and confusing to read. Time should be increasing to the right for each group. The colors are also largely "chart junk" as you can just bracket the first/last dates and use the same color.

Totally agree. Gains/time should always read "up and to the right."

Not my graph. Co-worker keeps the stats/makes the graphs...

the, I'd love to know where you get those housing price graphs, and I'd be even happier to see one for the DC Metro region. I'm looking at houses in the MD area and it's still insane. A run-down shack an hour out of Frederick is listed at $213K. The builders north of Frederick are pushing 4000sqft homes as "good for starters, but you'll need more if you decide to have kids." 600sqft shacks in the ghettoes of Rockville are listing at over $300K. Realtors are still saying what they've been saying, "Oh, yeah, the market's hit bottom, and it's on the way back up now. You'd better get pre-approved, and would you like to make an offer? This is very reasonably priced..."

It's not realistic yet, and it doesn't take a rocket surgeon to see that. I certainly hope it gets worse -- the worse for the market, the better for me -- because I'm just renting right now, with cash in the bank ready to buy.

Here's to a falling market,
Dan

What percentage of sales are REO or distressed sales? What is the cost/SF distribution? What percentage of pending go closing?

Uh..., how about the ROI in rent vs. mortgage payments? :confused: